President Trump’s efforts to reshape global trade with punitive tariff policies are pushing the United States and major economies toward slower economic growth, increasing uncertainty, and cooling investment and trade, according to projections released Tuesday.
The full impact of the higher U.S. tariffs is still playing out, but effects are beginning to be felt by American consumers, who are starting to curb spending, and in labor markets in countries where the duties have led companies to shed workers or curb hiring, the Organization for Economic Cooperation and Development, an intergovernmental group based in Paris, said in its latest outlook.
The global economy is forecast to grow 3.2 percent this year, compared with 3.3 percent in 2024. The estimate is a touch larger than previously expected because America’s trading partners ramped up manufacturing to get their goods across the U.S. border before the tariffs kicked in, the organization said.
Mr. Trump imposed tariffs, including duties of up to 50 percent on foreign steel and aluminum, on once-close trading partners like the European Union, Canada and India, as well as on longtime rivals like China. The new overall effective U.S. tariff rate — now at an estimated 19.5 percent, the highest since 1933 — has slowed economic and trade activity.
As the full brunt of the tariffs ricochets through supply chains and labor markets and changes consumer behavior, global growth will slow to 2.9 percent in 2026, the economic organization said.
“The global economy was more resilient than anticipated in the first half of 2025, but downside risks loom large as higher barriers to trade and geopolitical and policy uncertainty continue to weigh on activity in many economies,” the report said.
The United States will start to feel the impact heading into next year, according to the report. Its economy has been bolstered by large investments in artificial intelligence, and the higher costs of imports has so far been modest as firms use inventories and profit margins to avoid or absorb the initial effect of the tariffs.
But private consumption growth in the United States has already started to weaken, and economic momentum will be “more than offset by higher tariff rates, as well as a drop in net immigration,” the organization said. The U.S. economy is projected to slow to 1.8 percent this year from 2.8 percent in 2024, and cool further to 1.5 percent in 2026.
Europe is expected to grow even more slowly, just 1.2 percent this year and 1 percent in 2026, amid “increased trade frictions and geopolitical uncertainty,” the organization said. In China, which has been hit hard by Mr. Trump’s trade war and punitive tariffs, growth is projected to slow to 4.9 this year, from 5 percent last year, and to 4.4 percent in 2026.
Inflation is expected to decline in most major economies because of slower growth and weaker employment, but central banks should remain “vigilant,” the report said. Governments saddled with rising debt and widening deficits also need to do more to get their financial houses in order.
Financial markets are increasingly reflecting the global uncertainty, and there is growing concern about risks, the report added. Ten-year U.S. Treasury bonds, a benchmark of stability, are now commanding historically high premiums.
In France, which has been racked with political instability and a ballooning debt and deficit, the sovereign bond spread relative to Germany’s has been widening. Spot prices for gold, considered a safe haven, have risen around 40 percent since the start of this year and climbed on Tuesday to a fresh record high above $3,770 an ounce.
“To strengthen economic growth prospects, a key priority is to ensure a lasting resolution to trade tensions,” Mathias Cormann, the organization’s secretary general, said in a statement. “We recommend that governments engage productively with one another to make international trading arrangements fairer and function better.”
Liz Alderman is the chief European business correspondent, writing about economic, social and policy developments around Europe.
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