OECD Predicts Hit to World Economic Growth From Trump Trade War

The Organisation for Economic Co-operation and Development, OECD, has predicted in its latest forecast that US President Donald Trump’s escalating trade tariffs will hit world growth and raise inflation.

Canada and Mexico are forecast to see the biggest impact as they have had the harshest tariffs imposed on them, but US growth is also expected to be hit.

According to the BBC, the OECD has more than halved its growth outlook for Canada for this year and next, while it expects Mexico to be pushed into a recession.

The Paris-based OECD said the higher trade barriers and increased geopolitical and policy uncertainty were hitting investment and household spending.

In its latest forecast, it says Canada’s economy is predicted to grow by just 0.7 per cent this year and in 2026, compared with the previous forecast of 2 per cent for both years.

Mexico is now forecast to contract by 1.3 per cent this year and shrink a further 0.6 per cent next year, instead of growing by 1.2 per cent and 1.6 per cent as previously expected

Growth in the US has also been downgraded, with growth of 2.2 per cent expected this year and 1.6 per cent in 2026, down from previous forecasts of 2.4 per cent and 2.1 per cent.

Despite the US imposing tariffs on China, the OECD has increased its growth forecast for the country slightly to 4.8 per cent.