Trump’s tariff surge to drag US growth to 1.6% in 2025, global growth down to 2.9%: OECD
OECD projects US growth to fall to 1.6% in 2025 due to Trump’s tariff hikes; global growth to slow to 2.9%. India remains a bright spot with 6.3% growth.
Amid escalating trade tensions under President Donald Trump’s administration, the Organisation for Economic Co-operation and Development (OECD) has warned of a sharp slowdown in the US and global economies.
According to the OECD’s latest Economic Outlook 2025, US GDP growth is projected to decelerate to 1.6% in 2025 — down from 2.8% in 2024 — and is expected to slip further to 1.5% in 2026.
The key factor: Trump’s aggressive tariff policies. Since returning to the White House, he has raised average US tariff rates from 2.5% to 15.4%, the highest since 1938. The new measures include a 10% blanket tariff on imports and specific 25% tariffs on steel, aluminum, and auto parts — with plans to double steel and aluminum tariffs to 50%.
“These hikes will drive up domestic prices,” the OECD noted. About 10% of the US consumer basket consists of imports, excluding food and energy. The report adds that the burden of these price increases will largely fall on American consumers and businesses.
OECD Chief Economist Álvaro Pereira cautioned that further tariffs could stifle global economic growth and fuel inflation. The global economy is forecast to grow at just 2.9% in both 2025 and 2026 — down from 3.3% in 2024 and 3.4% in 2023.
China is also projected to slow down, with GDP expected to fall from 5% in 2024 to 4.3% by 2026. In response, Beijing has announced policy measures such as rate cuts and industrial funding.
In contrast, India remains resilient. The OECD forecasts India’s growth to rise slightly to 6.3% in 2025 and 6.4% in 2026, up from 6.2% in 2024, making it a standout in a sluggish global landscape.
