The Organization for Economic Cooperation and Development (OECD) has sounded an alarm over the potential impact of escalating trade tariffs initiated by U.S. President Donald Trump. The OECD warns that these trade disputes are likely to slow down global growth and increase inflationary pressures. Mexico, Canada, and China are expected to experience significant economic downturns as a result of these tensions, with Mexico facing the prospect of a recession.
In Mexico, the OECD forecasts a contraction of 1.3% in the economy this year, with further shrinkage of 0.6% anticipated next year. This is a stark revision from their earlier predictions, which projected growth rates of 1.2% and 1.6% for this year and next, respectively. The organization attributes these downward adjustments largely to the trade conflicts, suggesting that Mexico's economy could be pushed into recession.
Canada's economic outlook has also been severely downgraded, with growth expected to stall at a mere 0.7% this year and maintain the same pace in 2026. This marks a significant reduction from previous estimates, indicating the adverse impact of ongoing trade tensions on the Canadian economy.
The United States is not exempt from this economic slowdown. The OECD has downgraded its growth projections for the U.S., expecting a growth rate of 2.2% this year, a slight decline from the previously anticipated 2.4%. Looking ahead to 2025, growth is forecasted at 1.6%, down from earlier expectations of 2.1%.
China is also bracing for slowing growth, with projections indicating a decline from 4.8% in 2024 to 4.4% by 2026. This trend underscores the broader global economic challenges posed by the current trade dynamics.