WASHINGTON — Economic projections indicate that growth in the United States will decelerate sharply this year, falling to 1.6% from the previous year’s rate of 2.8%. This slowdown is attributed to the disruptive trade policies implemented by President Donald Trump, which have unsettled global markets, increased costs, and created uncertainty for businesses and consumers alike.
In a recent forecast, the Organization for Economic Cooperation and Development (OECD) highlighted that the U.S. economy, which is the largest globally, is anticipated to further slow to a growth rate of just 1.5% by 2026. The current administration’s trade strategies have significantly elevated U.S. tariff rates from an average of approximately 2.5% at the start of Trump’s presidency to a staggering 15.4%, the highest since 1938. Such tariffs have increased costs for both consumers and manufacturers who depend on imported materials and parts to produce their goods.
Globally, economic expansion is also expected to experience a downturn, with growth slowing to 2.9% this year and maintaining that pace into 2026, as per the OECD’s predictions. This reflects a marked decrease from the growth rates of 3.3% recorded last year and 3.4% projected in 2023. Despite encountering various global challenges, such as the COVID-19 pandemic and geopolitical tensions, the world economy has shown resilience, maintaining steady — if modest — expansion.
However, global economic prospects have been obscured by the current U.S. administration’s imposition of widespread tariffs. These measures, coupled with the uncertainty surrounding their implementation and the potential for retaliatory actions by other nations, have strained trade relations worldwide. In a significant pivot from longstanding American policies favoring free trade, President Trump has enacted 10% tariffs on imports spanning almost every country, alongside specific tariffs targeting steel, aluminum, and automobiles. Furthermore, he has threatened to increase these tariffs, proposing a hike to 50% on certain goods.
While not referencing Trump directly, OECD Chief Economist Álvaro Pereira indicated in a commentary that “there has been a noticeable rise in trade barriers and economic policy uncertainty.” He remarked that this escalation in uncertainty has adversely affected business and consumer confidence, which is likely to dampen trade and investment.
Compounding these challenges, a recent decision by a New York federal court blocked a majority of the tariffs imposed by Trump, citing an overreach of his authority. Meanwhile, an appeals court has allowed the Trump administration to continue collecting the levies while legal proceedings are ongoing.
China, the world’s second-largest economy, is forecasted to see its growth wane from 5% last year to 4.7% in 2025 and then drop further to 4.3% by 2026, due to the impact of U.S. tariffs. This situation exacerbates an already struggling Chinese economy, hindered by issues like its real estate sector’s downfall. To mitigate some impacts, the Chinese government has pledged interventions such as reducing interest rates, promoting bank lending, enhancing manufacturing capabilities, and supporting services like elder care.
The eurozone, comprising 20 countries using the euro, is expected to experience a gradual increase in economic growth, projected to rise from 0.8% last year to 1% by 2025, and further to 1.2% the year following, partially due to interest rate reductions by the European Central Bank. The OECD, situated in Paris and consisting of 38 member nations, strives to advance international trade and economic prosperity, regularly issuing reports and analyses to guide global economic policy and cooperation.