The OECD forecasts that the United States economy will expand at 1.6% this year before decreasing to 2.8% in 2024 because of Trump’s strong tariff policies and trade disturbances affecting business operations and consumer optimism.
The OECD published its report on Tuesday which shows the U.S. economy faces its most significant growth decline since the COVID-19 pandemic due to rising tariffs and worsening worldwide economic conditions. The group reported that U.S. average tariff rates have increased to 15.4% which represents the highest level since the late 1930s.
The OECD predicts U.S. economic growth will decrease to 1.5% in 2026 because of ongoing trade conflicts alongside rising debt levels and inflationary challenges. The worldwide economic growth projection for 2026 remains at 2.9% despite a decrease from the 3.4% rate in 2023.
Businesses remain cautious about investment and hiring because of the unpredictable nature of Trump’s trade policies and the potential retaliatory measures from trading partners according to the organization. American manufacturers face increased expenses for imported materials which reduces their production levels and profit margins.
The OECD notes that the U.S. economy demonstrated strength during recent years by surviving both the pandemic and worldwide disturbances. The organization stated that new protectionist measures and rising uncertainty threaten to reverse current economic progress.
The report highlights rising fears among economists that U.S. economic performance will suffer in upcoming quarters because of recent tariff increases and domestic fiscal challenges. The ongoing U.S.-major trading partner negotiations create an uncertain environment because Trump’s trade agenda remains unpredictable.