The growth in the worldwide economy is now expected to slow to a "modest" 2.9%, down from a previous forecast of 3.1%, according to the Organization for Economic Co-operation and Development (OECD). BBC News reports the downgrade is largely a result of Donald Trump's U.S. tariffs. The group slashed the outlook for the U.S. economy for 2025, from 2.2% to 1.6%, and predicted growth would slow again in 2026.
The Paris-based intergovernmental organization, which advises governments on economic policies, blamed a "significant" rise in trade barriers and warned that "weakened economic prospects will be felt around the world, with almost no exception."
Trump's unpredictable approach to implementing tariffs on a wide range of trading partners, in most cases designed to be punitive, has created widespread business and market uncertainty.
“Further trade fragmentation, including new tariff hikes and retaliatory actions, could intensify the growth slowdown and trigger significant disruptions in cross-border supply chains,” the OECD said in a press release June 3. “Inflation could be more persistent than anticipated, especially in economies facing substantially higher trade costs or with tight labor markets, prompting more restrictive monetary policy and weakening growth prospects.
Earlier on June 3, Trump wrote on social media: "Because of Tariffs, our Economy is BOOMING!" But the most recent official data showed the U.S. economy shrank at an annual rate of 0.2% in the first three months of this year, the first contraction since 2022.
