The Organization for Economic Cooperation and Development (OECD) has once again revised down its forecasts for global and U.S. economic growth amid heightened uncertainty fueled by President Donald Trump’s tariff policies.

In its latest report released this week, the OECD stated that U.S. economic growth is now expected to reach only 1.6% in 2025 and 1.5% in 2026—significantly lower than its earlier projection of 2.2% released in March.

This sharp downward revision is attributed to several key factors, including the impact of Trump’s tariffs, growing economic policy uncertainty, a slowdown in net immigration, and a shrinking federal workforce.

The OECD also cut its global growth forecast to 2.9% for both 2025 and 2026, down from the previous estimates of 3.1% and 3.0%, respectively.

In its report, the Paris-based organization noted that the slowdown is “concentrated in the United States, Canada, and Mexico,” while most other economies are facing more modest downward revisions.

“Global prospects are becoming more challenging,” the OECD wrote in its report, as quoted by CNBC International on Tuesday, June 3, 2025.

It added, “A substantial rise in trade barriers, tighter financial conditions, weakening business and consumer confidence, and elevated policy uncertainty could significantly undermine growth if such trends persist.”

The projections are based on the technical assumption that all trade tariffs in effect as of May 2025 will remain unchanged, even though they are still being legally contested within the United States.

Trump’s tariff policies have been volatile in recent weeks, contributing to instability in global markets. For example, a U.S. trade court had temporarily blocked country-based retaliatory tariffs introduced by Trump, only for those tariffs to be reinstated by an appeals court.

Additionally, Trump recently announced plans to double steel tariffs to 50%.

The effects of these policies on inflation remain a topic of debate among analysts and central bank policymakers worldwide. The OECD pointed out that higher trade costs stemming from tariffs could fuel inflation, although part of this effect may be offset by falling global commodity prices.

“Increased trade costs, particularly in countries that raise tariffs, will add to inflationary pressures, though these may be partly mitigated by weakening commodity prices,” said the OECD.

Inflation Outlook: Rising in the U.S., Falling Elsewhere
The OECD also updated its inflation forecast, noting a stark contrast between the United States and other major economies. For the G20 group, inflation is expected to hit 3.6% in 2025, down from the earlier estimate of 3.8%.

However, in the United States, inflation is now forecast to rise to 3.2%, up from a previous estimate of 2.8%.

Furthermore, the OECD warned that U.S. inflation could edge closer to 4% by the end of 2025 if tariff policies and external pressures remain unresolved.

This uncertainty not only risks slowing economic momentum but also threatens financial market stability, deters business investment, and undermines consumer confidence. Market anxiety over Trump’s protectionist stance plays a central role in shaping the OECD’s outlook for the global economy going forward.