OECD forecasts a sharp economic slowdown in the U.S., citing tariffs

What mixed signals connected the system are saying

What mixed signals connected the system are saying 02:21

U.S. economical maturation is apt to deed the brakes this year, with GDP dramatically slowing owed to the interaction of the Trump administration's tariffs and uncertainty astir its economical policies, the Organization for Economic Cooperation and Development, oregon OECD, said Tuesday.

GDP maturation is forecast to descent to 1.6% successful 2025 and 1.5% adjacent year, a crisp simplification from the 2.8% maturation recorded past year, according to the OECD, an planetary enactment of 38 subordinate countries that focuses connected promoting economical growth. 

While the OECD's U.S. forecast didn't notation President Trump by name, the study cited caller tariffs arsenic 1 of the superior causes of the economical slowdown. The Trump administration's policies, which person introduced caller import duties connected astir each overseas nation, person hiked the effectual tariff complaint to 15.4% from 2% past year, marking the highest complaint since 1938, the radical said. 

Because tariffs are paid by U.S. importers similar Walmart, those costs are mostly passed onto consumers successful the signifier of higher costs — prompting the OECD to forecast that ostentation successful the U.S. volition "spike successful mid-2025" and scope 3.9% by the extremity of 2025. 

The Consumer Price Index rose by 2.3% successful April, arsenic the tariffs mostly hadn't yet impacted prices astatine that point.

Without mentioning Mr. Trump, OECD main economist Álvaro Pereira wrote successful a commentary that accompanied the forecast that "we person seen a important summation successful commercialized barriers arsenic good arsenic successful economical and commercialized argumentation uncertainty. This crisp emergence successful uncertainty has negatively impacted concern and user assurance and is acceptable to clasp backmost commercialized and investment.''

The study added that the U.S. is facing risks "skewed to the downside, including a much important slowing of economical enactment successful the look of argumentation uncertainty, greater-than-expected upward unit connected prices from tariff increases, and ample fiscal marketplace corrections."

World economical maturation is besides forecast to dilatory to 2.9% this twelvemonth and enactment determination successful 2026, according to the OECD's forecast. That would people a important deceleration from maturation of 3.3% planetary maturation past twelvemonth and 3.4% successful 2023.

The Associated Press contributed to this report.

• Economy