Trump’s trade wars to slow economic growth in US and globally - OECD forecast
Photo: Donald Trump (Getty Images)
Global GDP growth will slow from 3.2% in 2024 to 3.1% in 2025 and 3.0% in 2026. This will occur due to higher trade barriers in several G20 economies and growing political uncertainty, which affects investment and household spending, the Organisation for Economic Co-operation and Development (OECD) reports.
According to the forecast, real annual GDP growth in the United States will slow from very high recent rates to 2.2% in 2025 and 1.6% in 2026.
Real GDP growth in the Eurozone is expected to be 1.0% in 2025 and 1.2% in 2026, as increasing uncertainty restrains growth.
Growth in China is forecast to slow from 4.8% this year to 4.4% in 2026.
Inflationary pressure persists in many economies, with overall inflation recently increasing again in a growing number of economies. Service price inflation remains high, with an average of 3.6% in OECD economies. According to forecasts, inflation in 2025-2026 will be higher than previously expected, though still moderate as economic growth slows. Overall inflation is predicted to decrease from 3.8% in 2025 to 3.2% in 2026 in G20 economies.
Trump's trade wars
As noted by the OECD, the high level of geopolitical and political uncertainty currently presents significant risks to the baseline forecasts. One potential risk is the escalation of trade restriction measures.
An illustration, where bilateral tariffs are raised on all non-commodity imports to the US with corresponding increases in tariffs applied to non-commodity imports from the US to all other countries, shows that global production could fall by approximately 0.3% by the third year, and global inflation could rise by 0.4 percentage points per year on average over the first three years.
"The impact of these shocks will be amplified if political uncertainty increases further or there is a widespread reassessment of risks in financial markets. This will intensify the downward pressure on corporate and household spending worldwide," the OECD notes.
The OECD (Organisation for Economic Co-operation and Development) is an international organization that unites 38 countries, aiming for economic development, improved living standards, and the stability of world trade.
The organization includes developed economies, including the United States, Canada, Germany, France, the United Kingdom, Japan, and others.
The headquarters is located in Paris, France. The OECD publishes reports, conducts research, and advises governments on economic policy matters.
President Donald Trump's tariff war against allies has already led to a decline in the American stock markets. For now, this does not pose a threat to Ukraine, but if the situation escalates into a global crisis, it will be impossible to avoid negative impacts.
