Economic growth in the United States and globally could be at risk amid rising prices and countries implementing tariffs against imports, according to a new report by the Organisation for Economic Co-operation and Development (OECD), an intergovernmental organization of 38 member nations, mostly high-income economies.
Inflationary pressures pose a headwind to growth in several countries, with prices recently rising “in an increasing share of economies.” During the 2025–26 period, inflation is expected to be “higher than previously expected, although still moderating as economic growth softens,” according to the report.
Another risk to growth is trade fragmentation, with a potential tariff war dampening the sector.
For instance, in a situation where the United States raises tariffs on all non-commodity imports coming from other nations, it could trigger retaliatory tariffs on a similar scale on U.S. imports. If the scenario continues, global output could fall by roughly 0.3 percent by the third year, the report said. During this period, inflation could rise by 0.4 percent per annum on average.
“The impact of these shocks would be magnified if policy uncertainty were to increase further or there was widespread risk repricing in financial markets. These would add to the downward pressures on corporate and household spending around the world,” the report states.
The Trump administration has cited various reasons such as fentanyl trafficking, existing tariffs imposed on U.S. goods, and trade deficits to justify the new tariffs placed on foreign imports.
In February, President Donald Trump said the steel and aluminum tariffs were necessary to prevent countries from taking advantage of the United States, to boost domestic production, and to bring back jobs to America.
“This is a big deal, the beginning of making America rich again,” he said. “Our nation requires steel and aluminum to be made in America, not in foreign lands.”
“The trade deficit of the United States threatens our economic and national security, has hollowed out our industrial base, has reduced our overall national competitiveness, and has made our nation dependent on other countries to meet our key security needs,” the White House said.
“By making trade more reciprocal and balanced, we can reduce the trade deficit; grow the United States economy; and improve our trade relationships with trading partners to the benefit of American workers, manufacturers, farmers, ranchers, entrepreneurs, and businesses.”
“Tariffs are a powerful, proven source of leverage for protecting the national interest,” it said.
Some lawmakers have warned about the negative effects of the tariffs. A report released this month by Congress’s Joint Economic Committee (JEC) said that the Trump administration’s tariffs “will drive up costs for the average American family between $1,600 and $2,000 per year.”
The report was released by Rep. Don Beyer (D-Va.), who serves as the senior House Democrat on the JEC.
“These tariffs also impact the price of domestically produced goods by causing U.S. producers to raise prices if their supply chain relies on imported raw materials subject to the tariffs,” the report states.
Meanwhile, businesses are optimistic about the prospects of the U.S. economy amid the Trump administration’s imposing tariffs on foreign nations.