OECD warns US economy faces severe slowdown amid trade tensions

In recent months, the global economic landscape has been challenged by the ongoing trade tensions primarily instigated by U.S. President Donald Trump. On June 3, 2025, the Organisation for Economic Co-operation and Development (OECD) cut its global growth forecast, projecting a marked slowdown for the United States in the coming years. This revision followed Trump's imposition of various tariffs that have created significant economic uncertainty, affecting businesses and consumer confidence across the globe. The OECD underscored that the U.S. economy is expected to grow at a mere 1.6% in 2025, down from a more optimistic 2.2% projected earlier. Meanwhile, the global economic growth has been lowered to 2.9%, signifying a considerable reduction from previous years and highlighting the ripple effects of the U.S. trade policy. Furthermore, the outlook includes revisions for other major economies, such as China and Japan, which face similar challenges from increased tariffs and trade barriers. While the introduction of tariffs was ostensibly aimed at protecting U.S. manufacturing jobs, the economic ramifications have been adverse, leading to increased costs and complicating trade relations. As American manufacturers rely heavily on imports for raw materials, Trump’s trade policies have inadvertently led to diminished growth prospects and rising inflation. Tariff rates have surged to the highest levels observed since 1938, exacerbating the situation in sectors heavily dependent on international trade. The OECD warned that the effects will not be confined to the United States alone; the organization indicated that economic prospects are grim worldwide, particularly in countries closely linked to the U.S. economy. This includes Canada and Mexico, which have also experienced disruptions due to the newly implemented tariffs. Additionally, these trade tensions have raised broader concerns regarding global economic stability, as retaliatory tariffs could lead to further disruptions in global supply chains. The impact is set to be felt not just through economic growth, but also in inflation rates that are expected to continue rising in countries enforcing these barriers. As trade negotiations between the U.S. and its partners remain unpredictable, economic policymakers around the world are grappling with the fallout of Trump's aggressive tariff strategies. The Bank of England Governor Andrew Bailey noted that heightened uncertainty resulting from U.S.-China trade tensions complicates the UK's ability to implement its own economic policies effectively. Given this context, financial markets have been highly responsive, manifesting in rising stock prices as countries seek to negotiate better trade terms while grappling with the looming challenges of high tariffs and their implications on economic growth. This overarching atmosphere of uncertainty has made the world economy precarious, with many economists urging a resolution that emphasizes collaboration over confrontation.