OECD Forecasts Economic Slowdown and Higher Inflation in the U.S. Due to Trump's Tariffs

Date: June 3, 2025
Source: CBS News

The Organization for Economic Cooperation and Development (OECD) has projected a significant economic slowdown in the U.S. for 2025, citing the impact of tariffs and policy uncertainty stemming from the Trump administration.

Key Highlights

• GDP Growth Forecast: The OECD estimates a drop in GDP growth to 1.6% in 2025 and 1.5% in 2026, down from 2.8% in the previous year.

• Tariff Impact: The report attributes the slowdown to increased tariffs, which have risen the effective tariff rate to 15.4% from 2% last year, marking the highest rate since 1938. These tariffs are expected to lead to higher consumer prices.

• Inflation Projections: Inflation in the U.S. is projected to spike to 3.9% by the end of 2025, with an increase anticipated in mid-2025. The Consumer Price Index rose by 2.3% in April, indicating that the full impact of tariffs had not yet been felt.

• Economic Uncertainty: OECD Chief Economist Álvaro Pereira noted a "significant increase in trade barriers" and emphasized how this uncertainty is dampening business and consumer confidence, which could hinder trade and investment.

• Global Economic Context: The OECD also forecasts a slowdown in global economic growth to 2.9% for both 2025 and 2026, down from 3.3% in the previous year.

The report underscores the risks facing the U.S. economy, including potential further slowdowns and inflationary pressures tied to tariff increases and market corrections..