President Donald Trump’s trade war will wreak greater economic damage than previously expected, both in the United States and everywhere else, according to new forecasts by the Organisation for Economic Co-operation and Development. In a report Tuesday, the group of 38 mostly wealthy nations sharply downgraded its 2025 economic growth forecast for America to 1.6% from the 2.2% projected in March and said growth would be even weaker next year. The report underscores the uncertainty and chaos around Trump’s tariffs, as well as their potential to cause lasting harm across the world. The Paris-based organization cited higher tariffs, including retaliatory tariffs imposed on American exports, a slowdown in net immigration and a “sizable reduction” in the federal workforce. The OECD also expects the global economy to slow markedly to 2.9% growth both this year and next — a downgrade from its prior forecasts of 3.1% and 3% respectively. That’s based on the assumption that tariffs worldwide will remain at their mid-May levels, it said. “The global economy has shifted from a period of resilient growth and declining inflation to a more uncertain path,” OECD Secretary-General Mathias Cormann said in a statement. “Today’s policy uncertainty is weakening trade and investment, diminishing consumer and business confidence and curbing growth prospects.” In its Economic Outlook report, the OECD said it expects the slowdown to be “concentrated” in the US, Canada, Mexico and China — four of the countries most affected by Trump’s new tariffs. Since retaking office in January, the US president has hiked import duties on most of America’s trading partners and on key goods, including cars and steel. Despite his tariff plan hitting a legal stumbling block last week, a round of punishingly high “reciprocal tariffs” are due to whack many of America’s trading partners from July 9 unless they can strike a deal with Washington. The tariffs, their erratic implementation and the unpredictability that both have injected into the global economy are weighing on many businesses and consumers. According to the OECD, the new US import taxes, in combination with retaliatory trade barriers erected by China and Canada, are “pointing to much greater disruption than during the US-China trade tensions in 2018-19” — a reference to the trade war during Trump’s first term. The OECD said new levies risk pushing up inflation in the countries imposing them and that central banks — which hike interest rates to slow price rises — should “remain vigilant.” In contrast, Trump has publicly pressured US Federal Reserve Chair Jerome Powell to cut the cost of borrowing in America, while Powell has preferred to wait to see how the president’s tariffs will impact the world’s largest economy before deciding whether to cut or raise rates.
Trump’s tariff fallout? It’s worse than we previously thought, says OECD
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"OECD Projects Increased Economic Damage from Trump's Tariffs"
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TruthLens AI Summary
The Organisation for Economic Co-operation and Development (OECD) has released a new report indicating that the economic repercussions of President Donald Trump's trade war are expected to be more severe than initially anticipated. The OECD has downgraded its economic growth forecast for the United States in 2025 to 1.6%, a significant reduction from the previously projected 2.2%. Furthermore, the organization predicts even weaker growth for the upcoming year. The report emphasizes the uncertainty surrounding Trump's tariffs, which have not only affected the U.S. economy but are also poised to inflict lasting damage globally. Factors contributing to this bleak outlook include increased tariffs, retaliatory measures against American exports, a slowdown in net immigration, and a notable reduction in the federal workforce. The OECD's projections suggest that the global economy will also experience a slowdown, with growth estimated at 2.9% for both this year and next, down from earlier forecasts of 3.1% and 3% respectively. This assessment is based on the assumption that tariffs will remain at their mid-May levels, highlighting the current volatility in international trade dynamics.
OECD Secretary-General Mathias Cormann remarked on the shift from a period of stable growth and declining inflation to a more unpredictable economic landscape. The report indicates that the slowdown is likely to be most pronounced in the U.S., Canada, Mexico, and China, all of which have been significantly impacted by the new tariffs imposed by Trump since he took office. Despite facing legal challenges, the administration's plan to implement further reciprocal tariffs is set to take effect unless agreements are reached. The unpredictable nature of these tariffs has created an environment of uncertainty, adversely affecting both business operations and consumer confidence. The OECD warns that the new import taxes, coupled with retaliatory measures from Canada and China, could lead to greater disruptions than those experienced during the previous U.S.-China trade tensions. Additionally, there are concerns that these tariffs may drive inflation higher, prompting central banks to remain alert to the potential impacts on economic stability. In contrast, Trump has been urging the U.S. Federal Reserve to lower interest rates, while the Fed has opted to wait and assess the full implications of the tariffs on the economy before making any decisions regarding rate adjustments.
TruthLens AI Analysis
The recent report from the OECD highlights the significant economic repercussions of President Trump's trade policies, underscoring a shift in both domestic and global economic forecasts. The analysis reveals a deeper concern about the long-term impacts of these tariffs, raising questions about their broader implications on trade and investment.
Economic Damage Assessment
The OECD has downgraded its growth projections for the US, indicating a reduction from 2.2% to 1.6% by 2025. This adjustment signals a serious reevaluation of the economic landscape, emphasizing that Trump's tariffs are not only affecting the US economy but also causing ripple effects globally. The report attributes these economic challenges to several factors, including retaliatory tariffs and a slowdown in immigration, which could exacerbate labor shortages and overall economic performance.
Global Economic Slowdown
A forecasted global growth rate of 2.9% for the next two years, down from previous estimates, illustrates a broader economic malaise potentially linked to the trade war. The OECD’s comments about the shift from resilient growth to uncertainty reflect growing apprehension among economists regarding the sustainability of current economic trends. This uncertainty can diminish confidence among consumers and businesses, leading to reduced investment and spending.
Potential Impacts on Trade Relations
The ongoing trade war and the implementation of high tariffs could provoke further retaliatory measures from other nations, complicating international trade dynamics. The report's emphasis on specific countries like Canada, Mexico, and China shows a targeted concern about regions heavily impacted by US tariffs. The potential for escalating trade tensions could lead to a more fragmented global trade system, which may hinder economic recovery efforts post-pandemic.
Public Perception and Political Ramifications
There is an underlying intention to shape public perception regarding the effectiveness of current trade policies and their consequences. By highlighting the economic forecast downgrade, the report aims to bring public and political attention to the potential missteps in trade strategy. This could influence voter sentiment and pressure policymakers to reconsider their approaches to international trade.
Market Reactions and Investment Implications
This news could have immediate implications for financial markets, especially those sectors reliant on international trade, such as manufacturing and agriculture. Investors may react to the forecasted slowdown by adjusting their portfolios to mitigate risk, particularly in industries directly affected by tariffs. Stocks related to manufacturing and exports may experience volatility as the market digests these new forecasts.
Geopolitical Considerations
The implications of Trump's tariff policies extend beyond economics, potentially altering the balance of global power. Nations might seek to form new trade alliances to counteract the effects of US tariffs, which could lead to significant geopolitical shifts. The relevance of this report is heightened in today's context, where economic policies are often intertwined with national security and diplomatic relations.
The article presents a comprehensive picture of the economic landscape influenced by Trump's trade policies, raising concern over both domestic and global stability. The manipulation rate appears moderate, primarily through the framing of economic forecasts and the emphasis on the potential negative impacts of tariffs. While the data presented is factual, the narrative may influence public opinion against current trade strategies.