Associated Press Economics Writer Paul Wiseman
WASHINGTON (AP) — US economic growth will slow from 2.8% last year to 1.6% this year as President Donald Trump’s volatile trade war disrupts global commerce, raises costs and leaves businesses and consumers who have paralyzed uncertainty.
According to the OECD, the Organization for Economic Cooperation and Development predicts that the US economy (the world’s largest) will be slower by another 1.5% in 2026 on Tuesday. Tariffs increase costs for consumers and American manufacturers who rely on imported raw materials and components.
According to OECD forecasts, global economic growth will reach just 2.9% this year, and will be staying in 2026. This marks a significant slowdown due to global growth of 3.3% last year and a 3.4% growth in 2023.
The global economy has been remarkably resilient in recent years, and has continued to expand steadily, although certain, in the face of global shocks such as the Covid-19 pandemic and Russia’s invasion of Ukraine.
But global trade and economic outlook are clouded by Trump’s sweeping taxes on imports, unpredictable ways, his deployment of them, and the threat of retaliation from other countries.
In favor of freer world trade, Trump overturned decades of US policy, along with specific obligations on steel, aluminum and automobiles, he imposed a 10% tax (customer duties) on imports from almost every country on the planet. He also threatens more import taxes, including doubling the duplication of tariffs on steel and aluminum to 50%.
Without mentioning Trump by name, Alvaro Pereira, chief economist at the OECD, said, “We have seen a significant increase in trade barriers and uncertainty in economic and trade policies. This rapid increase in uncertainty has negatively affected business and consumer confidence, and is trying to curb trade and investment.”
In addition to uncertainty over Trump’s trade war: a federal court in New York last week ruled that he had stepped over his authority to imposing them. The appeals court later allowed the Trump administration to continue collecting taxes, but the appeal worked in a way that passed US courts.
China, the world’s second largest economy, is projected to slow growth from 5% last year to 4.7% in 2025 and 4.3% in 2026. Chinese exporters hoblem an economy that has been damaged by Trump’s tariffs and has already weakened by the collapse of the country’s real estate market. Some damages will be offset by government support. Last month, Beijing outlined plans to cut interest rates and encourage bank lending, and plans to allocate more money for factory upgrades and care for seniors.
The 20 euro-currency-sharing countries are planning to collectively recover economic growth from 1.2% from 0.8% last year, according to OECD, which was supported by interest rate cuts from the European Central Bank.
The Paris-based OECD, made up of 38 member states, promotes international trade and prosperity and issues regular reports and analysis.
Original issue: June 3, 2025, 7:43am EDT
