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2h ago

OECD Sees Tariffs Dragging U.S. and Global Growth Through 2026

The report says the full impact of President Trump’s reciprocal tariffs has yet to pass through, with early strains already visible in costs, hiring, prices.

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The weak Canadian dollar and the trade war with the United States is expected to boost Quebec's tourism economy this year. Canadian dollar coins are displayed on a map along the border of Canada and the United States of America, in a Jan. 9, 2014 file photo. THE CANADIAN PRESS/Paul Chiasson

Overview

  • The OECD’s interim outlook projects world GDP easing from 3.3% in 2024 to 3.2% in 2025 and 2.9% in 2026 as higher trade barriers weigh on activity.
  • U.S. growth is forecast to slow from 2.8% in 2024 to 1.8% in 2025 and 1.5% in 2026, with the OECD attributing much of the downshift to steeper tariffs and reduced net immigration.
  • Average U.S. duties rose to about 19.5% in August with reciprocal tariffs now applied to more than 90 trading partners, and the OECD says the full effects will phase in over time.
  • Early impacts include softening labor markets and cost pressures, with a Dallas Fed survey reporting negative effects on many Texas retailers and manufacturers and John Deere citing hundreds of layoffs linked to higher input costs.
  • Policy and legal responses are unfolding, including a Bank of Canada rate cut citing weaker conditions, a U.S. Supreme Court hearing on the tariff program set for early November, and OECD calls for cooperation to ease trade tensions.