OECD Warns of Economic Fallout from Trump’s Trade Wars
The Organisation for Economic Co-operation and Development (OECD) has issued a stark warning about the impact of Donald Trump’s trade wars, asserting that they are fragmenting the global economy and threatening recent progress on growth and inflation. In its latest economic forecast, the OECD downgraded projections for global growth for 2023 from 3.3% to 3.1%, while lowering the outlook for the UK by 0.3 percentage points to 1.4%.
The organization noted that increased trade barriers and geopolitical uncertainties are undermining economic recovery efforts. Trump’s plans to impose 25% tariffs on virtually all merchandise imports from Canada and Mexico could significantly impact activity in those countries, with Mexico facing a potential recession and a projected contraction of 1.3% in 2025.
Additionally, the OECD cut its U.S. growth forecast for this year from 2.5% to 2.2%, and for 2026 from 2.1% to 1.6%. Growth in China is expected to slow as well, from 4.8% to 4.4% during the same period. The OECD warned that a broad increase in trade restrictions would not only stunt economic growth but also escalate inflation rates globally.
With rising trade tensions, the OECD emphasized the need for governments to collaborate within the global trading framework to prevent retaliatory measures that could harm living standards. As British Chancellor Rachel Reeves prepares for next week’s spring statement, she acknowledged these global headwinds and asserted the UK’s resolve to adapt to a changing landscape. The UK is forecast to be Europe’s fastest-growing G7 economy, following only the U.S., according to the OECD, which maintains its inflation predictions at 2.7% for this year and 2.3% for 2026.
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