The Organisation for Economic Co-operation and Development (OECD) has sounded alarm bells over President Trump’s tariff policies, warning they are stifling economic growth in the US and worldwide while thrusting prices upward, setting a precarious landscape for the global economy. This quarterly report reveals the ramifications of these tariffs as US markets teeter in correction territory, indicating a potential tightening grip on global economic stability and renewed inflation at a critical juncture.
The Trump administration’s sweeping imposition of import taxes across various goods has prompted immediate retaliation from major trading partners, sowing uncertainty and stifling business investments that stimulate economic growth. The OECD highlighted that escalating trade costs from tariffs not only jeopardise consumer spending and confidence but also impair revenue streams for governments worldwide, while increasing the cost burden for both consumers and businesses alike.
With a markedly bleaker outlook, the OECS forecasts a significant slowdown in US economic growth, projecting rates of only 2.2% for 2025 and 1.6% for 2026, down from an annual growth rate of 2.8%. Global growth is anticipated to dip to 3.1% and then 3% in the subsequent year, which is notably lower than earlier predictions.
Inflation in the US is also projected to be higher than previously estimated, with a rise to 2.8% in 2025, while Canadian and Mexican economies are set to suffer even more, with potential recessions looming due to Trump’s proposed cuts. Canada is expected to see a mere 0.7% growth, and Mexico’s economy is predicted to shrink up to 1.3%. In contrast, China is likely to weather the storm better than its North American counterparts, with their government taking proactive measures to bolster domestic spending in response to US tariffs.
The challenge for central banks worldwide will be to navigate this inflationary tide, especially when many have been accustomed to lowering rates to stimulate growth. The OECD anticipates that the inflationary impact from tariffs may compel central banks to maintain elevated interest rates longer than desired, thereby continuing the economic strain felt by both consumers and businesses.
The OECD warns that Trump’s tariffs are damaging global economic growth and reigniting inflation. The report predicts a decline in US economic growth to 2.2% by 2025 and inflation rates to rise to 2.8%. Canada and Mexico face severe economic setbacks, while China may fare better. Central banks will struggle to manage inflation while needing to adjust interest rates strategically.
In summary, the OECD’s report paints a troubling picture of economic repercussions stemming from Trump’s tariff policies, threatening both US and global growth alongside rising inflation rates. While North American economies are set to face serious challenges, China appears poised for greater resilience. This intricate landscape will require careful navigation by central banks amid inflationary concerns, complicating efforts to stimulate economic growth.
Original Source: www.cnn.com
