Aggressive tariffs imposed by Donald Trump spark global economic anxiety and push OECD to warn of declining growth and rising inflation

When governments take a hard stance on trade, the effects don’t stay contained within one country — they spread worldwide, influencing markets, jobs, and everyday lives.

A recent report from the OECD (Organisation for Economic Co-operation and Development) shines a spotlight on how aggressive trade moves, especially those led by the U.S. under Donald Trump, are shaking up the global economic landscape.

The U.S. Economy Takes a Hit

According to the OECD’s latest forecasts, the U.S. economy is expected to slow significantly this year, with growth dropping to 1.6% from 2.8% in 2024.

This sharp slowdown is tied directly to the tariffs and trade barriers introduced, which have rattled markets and businesses alike.

It’s a clear warning sign that these policies are having real consequences beyond just political headlines.

Global Growth Slows More Than Expected

The OECD didn’t just single out the U.S. — it also lowered its global growth forecast from 3.3% last year to 2.9% this year. The reason? The widespread impact of increased protectionism.

When countries raise tariffs, it makes goods more expensive, discourages trade, and ultimately drags down economic activity.

This environment is pushing inflation higher, squeezing consumers and businesses worldwide.

The Risk of Escalation and Its Effects on Confidence

One major concern highlighted is the possibility of a trade war spiraling out of control.

If other countries respond with their own heavy tariffs, the economic damage could deepen further.

Beyond the numbers, this uncertainty is hurting consumer confidence and holding back investments, as businesses hesitate to commit amid unpredictable policy shifts.

OECD’s Call for Calm and Cooperation

To turn things around, the OECD urges governments to dial down trade tensions.

Lowering tariffs and removing trade barriers would help revive growth and investment, as well as ease inflation pressures.

This approach isn’t just a nice-to-have — the OECD labels it the top priority for policy makers globally.

Additional Economic Challenges in the U.S.

The report doesn’t stop at trade. It also points to other Trump administration policies, like major cuts in the federal workforce and tighter immigration controls, which are further slowing economic momentum.

These factors, combined with weaker growth, are expected to push the U.S. budget deficit higher despite tariff revenue and spending cuts.

What Lies Ahead?

As OECD members, including U.S. trade officials, prepare to meet in Paris for their annual discussions, the stakes are clear.

Decisions made now could shape the economic trajectory for years to come.

With headwinds from reduced exports, high policy uncertainty, and slowed immigration growth, the path forward demands careful cooperation and smart policymaking.

The big question remains: Will global leaders heed the OECD’s advice and work together to stabilize growth, or will trade tensions continue to unsettle the world economy?