Trump’s tariffs are inflicting serious economic damage and reigniting inflation, OECD says

President Donald Trump’s tariff policies are slowing economic growth in the United States and around the world while sending prices higher again, creating a toxic stew for the global economy that could grow even worse if tensions escalate, the Organisation for Economic Co-operation and Development said Monday.

President Donald Trump’s tariff policies are slowing economic growth in the United States and around the world while sending prices higher again, creating a toxic stew for the global economy that could grow even worse if tensions escalate, the Organisation for Economic Co-operation and Development said Monday. The quarterly report is the first sweeping attempt by global economists to document and forecast the damage from Trump’s policies to the economies of America and its trading partners. The OECD report shows what US markets have been signaling for several weeks as they’ve rapidly tumbled into correction territory: Trump’s tariffs could choke the global economy and reignite inflation at a precarious time. Massive new import taxes on a variety of goods from a range of countries imposed by the Trump administration have been met with instant retaliation from some of America’s biggest trading partners. Threats of new tariffs and Trump’s on-again, off-again levies have led to growing uncertainty for businesses around the world, preventing them from making investments that can drive economic growth, the OECD said. Meanwhile, fears of rebounding inflation from tariffs have dragged down consumer sentiment and spending, cutting off fuel for the US and global economies. “If the announced trade policy actions persist, as assumed in the projections, the new bilateral tariff rates will raise revenues for the governments imposing them but will be a drag on global activity, incomes and regular tax revenues,” the OECD said. “They also add to trade costs, raising the price of covered imported final goods for consumers and intermediate inputs for businesses.” The group of 38 mostly wealthy nations made new economic forecasts that are noticeably worse than its previous predictions. The OECD predicted US economic growth would slow dramatically this year and next, to 2.2% in 2025 and just 1.6% in 2026. America’s economy grew at a 2.8% rate last year. The global economy is expected to grow 3.1% this year and 3% next year, down from 3.2% growth in 2024. Meanwhile, US inflation will pick up this year, the OECD predicted. Prices are expected to rise 2.8% in 2025, up from 2.5% last year. They’ll continue to be elevated in 2026, rising 2.6%, the OECD forecast.