A new analysis released this month by the Organization for Economic Cooperation and Development (OECD) shows the extensive impacts of former President Donald Trump’s tariffs. Or, more accurately, their impact is much worse than we thought before. The Paris-based organization emphasizes the unpredictability and turmoil around these tariffs. While encouraging the administration to negotiate, they caution that these tariffs risk inflicting long-term damage to global markets.
Trump’s administration has significantly hiked import duties on key goods, including cars and steel, affecting most of America’s trading partners. The OECD notes that retaliatory tariffs placed on American exports only pile on the pain. These increased tariffs weren’t the end of it—their introduction was retaliatory, meant to respond to Trump’s original actions, setting off a chain of tit-for-tat, escalating tariffs.
Starting July 9, China will face a third round of upsettingly unproductive and punitive “reciprocal tariffs.” America’s trading partners need to work out an agreement with Washington to prevent these tariffs from being enacted. This radical deadline sets an extraordinary level of uncertainty to a terribly precarious trading climate.
OECD Secretary-General Mathias Cormann underlined the critical nature of the current situation, stating, “Today’s policy uncertainty is weakening trade and investment, diminishing consumer and business confidence and curbing growth prospects.” This uncertainty is reflected in the OECD’s downgraded economic growth forecast for the United States, which has been revised from 2.2% to 1.6% for 2025. The short-term forecast anticipates that tariffs internationally will remain at levels seen in mid-May. This cautious note points to a continued weak state of the global economy.
On the campaign trail, Trump has repeatedly called on Federal Reserve Chair Jerome Powell to decrease borrowing costs in America. This call is in addition to the current tariffs. Powell has decided to play the long game. His motive is to judge the potential effects of these tariffs on the broader economy before making further moves on interest rates. This hesitancy only contributes to the ongoing policy uncertainty that the OECD continues to caution could derail economic recovery.
“The global economy has shifted from a period of resilient growth and declining inflation to a more uncertain path,” Cormann remarked, highlighting the broader implications of these trade policies.