OECD Forecasts U.S. Economic Slowdown Amid Tariff Uncertainty

Tone & Political Bias: Moderately Left-Leaning

Why: The report focuses on negative consequences of Trump-era trade policies, highlighting economic disruptions and legal overreach, often emphasized by left-leaning narratives.

U.S. Growth Projected to Decline

The Organization for Economic Cooperation and Development (OECD) projects that the U.S. economy will grow by just 1.6% in 2025, down from 2.8% in 2024. This significant slowdown is linked to uncertainty in trade policy and reduced private investment, largely attributed to President Donald Trump’s tariff increases.

Tariff Increases and Economic Impact

Since re-entering office, President Trump has raised the average U.S. tariff rate from 2.5% to 15.4%—the highest since 1938. These increases are aimed at reducing trade deficits and protecting domestic industries. However, the OECD warns they are instead stifling business confidence and raising costs for U.S. consumers and companies.

Higher import costs are making it more expensive for businesses to source materials and for households to buy goods. This has led to lower business investment and weaker consumer demand, contributing to slower economic growth.

Legal Challenges to Tariff Authority

A recent federal court ruling declared that Trump overstepped his presidential authority by using the International Emergency Economic Powers Act to impose broad tariffs. The administration has announced it will appeal, but the ruling introduces new legal uncertainty around the durability of current trade measures.

This case adds another layer of complexity to a trade environment already marked by frequent policy changes and global tensions.

Global Economic Outlook

The OECD also forecasts a broader global slowdown. Worldwide economic growth is expected to fall from 3.3% in 2024 to 2.9% in 2025. The organization warns that increasing trade barriers and growing policy unpredictability are undercutting international trade and cross-border investment.

The report emphasizes that such uncertainty is causing businesses to delay hiring and investment decisions, with potential long-term effects on global productivity and supply chain resilience.

Sector-Specific Effects in the U.S.

Despite the national slowdown, certain sectors have seen gains. Discount retailers like Dollar General are reporting strong performance, driven by consumers turning to low-cost options amid inflation and economic insecurity. This shift reflects broader trends in consumer behavior as households adapt to rising prices and uncertain outlooks.

The OECD’s analysis reflects growing concerns among economists and international institutions about the sustainability of protectionist trade strategies. With legal questions mounting and economic data pointing to a slowdown, pressure may rise for more predictable, rules-based trade policies in the months ahead.