The U.S. economy is projected to slow sharply in the coming years, with GDP growth expected to decline significantly due to the effects of new tariffs and ongoing policy uncertainty, according to a report released Tuesday by the Organization for Economic Cooperation and Development (OECD).
The OECD forecasts U.S. GDP growth will fall to 1.6% in 2025 and 1.5% in 2026, down from 2.8% last year. Though the report does not mention former President Donald Trump by name, it attributes the slowdown in part to the “OECD Trump tariffs”—a sweeping set of new import duties introduced under the Trump administration. These tariffs have raised the average effective rate from 2% to 15.4%, the highest level since 1938.
Because these tariffs are paid by U.S. importers, the costs are being passed on to consumers, contributing to inflationary pressures. As a result, the OECD expects U.S. inflation to spike in mid-2025 and hit 3.9% by year-end. In April, the Consumer Price Index had already increased by 2.3%, though the full impact of the tariffs had yet to be reflected in prices.
OECD Chief Economist Álvaro Pereira noted that rising trade barriers and heightened economic uncertainty are weighing heavily on business and consumer confidence. “This sharp rise in uncertainty has negatively impacted trade and investment,” he said.
The OECD also warned that risks to the U.S. economy remain tilted to the downside. These include a deeper-than-expected slowdown due to persistent uncertainty, inflation accelerating beyond forecasts from tariff hikes, and potential turbulence in financial markets.
Globally, economic growth is also expected to slow. The OECD projects world GDP growth to ease to 2.9% this year and remain there through 2026, compared with 3.3% in 2024 and 3.4% in 2023.
