The U.S. economy is expected to slow significantly this year, with growth projected to drop to 1.6% from 2.8% in 2024. According to the latest forecast by the Organization for Economic Cooperation and Development (OECD), this decline is largely attributed to disruptive trade policies under President Donald Trump, which have created global economic uncertainty, raised costs, and shaken confidence among consumers and businesses.
Looking ahead, the OECD forecasts that U.S. growth will ease further to just 1.5% by 2026. Since Trump returned to the presidency, the average U.S. tariff rate has surged from about 2.5% to 15.4%—its highest level since 1938. These tariffs have pushed up prices for both consumers and manufacturers who depend on imported goods and materials.
On a global scale, economic growth is also losing momentum. The world economy is expected to expand by just 2.9% this year and remain at that pace through 2026. That represents a noticeable slowdown from 3.3% growth in 2024 and 3.4% in 2023. Despite resilience in the face of major disruptions like the COVID-19 pandemic and geopolitical conflicts, recent trade tensions are casting a shadow over global prospects.
Trump’s broad application of tariffs—including a 10% duty on nearly all imported goods and targeted tariffs on steel, aluminum, and automobiles—has upended decades of U.S. trade policy. His administration has also hinted at more aggressive moves, such as doubling tariffs on steel and aluminum to 50%.
Although OECD chief economist Álvaro Pereira didn’t name Trump directly, he noted a “significant increase in trade barriers” and a sharp rise in policy uncertainty, which he said is weakening both consumer and business confidence and limiting global trade and investment.
Complicating the issue further is ongoing legal wrangling over the tariffs. A federal court recently ruled that Trump had exceeded his authority in imposing many of them. However, an appeals court has allowed the tariffs to stay in place while legal proceedings continue.
China, the world’s second-largest economy, is also feeling the strain. Growth is expected to fall from 5% in 2024 to 4.7% in 2025 and then 4.3% in 2026. Trump’s tariffs are likely to further burden Chinese exports, adding pressure to an economy already hit hard by a struggling real estate sector. In response, Beijing has introduced measures to boost activity, such as interest rate cuts, easier lending, and increased spending on manufacturing upgrades and social services.
Meanwhile, countries in the eurozone are projected to see modest improvements. Growth among the 20 nations using the euro is forecast to rise from 0.8% in 2024 to 1% in 2025 and 1.2% in 2026, supported by expected interest rate reductions from the European Central Bank.
The OECD, headquartered in Paris and composed of 38 member nations, regularly provides assessments of the global economy and promotes policies to enhance trade and economic development.
