--- title: "OECD Lowers Global Growth Forecast, Warns U.S. Will Pay a Heavy Price for Trade War" slug: oecd-lowers-global-growth-forecast-warns-u-s-will-pay-a-heavy-price-for-trade-war date: 2025-03-17 modified: 2026-09-10 author: Bhavishya Goyal excerpt: "" meta_description: OECD cuts global growth forecasts as the U.S. faces trade war costs. Stay ahead of macro shifts and automate your trading strategy with PickMyTrade. focus_keyword: "" canonical_url: "https://blog.pickmytrade.io/oecd-lowers-global-growth-forecast-warns-u-s-will-pay-a-heavy-price-for-trade-war/" og_title: "OECD Lowers Global Growth Forecast, Warns U.S. Will Pay a Heavy Price for Trade War" og_description: OECD cuts global growth forecasts as the U.S. faces trade war costs. Stay ahead of macro shifts and automate your trading strategy with PickMyTrade. og_image: "https://blog.pickmytrade.io/wp-content/uploads/2025/03/oecd-lowers-global-growth-forecast-warns-u-s-will-pay-a-heavy-price-for-trade-war-1024x576.avif" schema_type: Article categories: - Economy tags: [] reading_time: 2 word_count: 485 robots: "index, follow" lang: en-US --- # OECD Lowers Global Growth Forecast, Warns U.S. Will Pay a Heavy Price for Trade War On **Monday (March 17th)**, the **Organization for Economic Cooperation and Development (OECD)** downgraded its **global economic growth outlook**, warning that the **trade war launched by President Trump** will negatively impact economic growth in the **United States, Canada, Mexico, and beyond**. The broader trade conflict is expected to further weaken the **global economic outlook**. ## **Global Economic Growth Forecast Revised Downward** In its latest **Global Economic Prospects** report, the **OECD** predicts: - **Global GDP growth** of **3.1% in 2025** and **3.0% in 2026**, revised **down by 0.2 and 0.3 percentage points** from its December 2024 forecast. - The **U.S. economy** is now expected to grow at **2.2% in 2025** and **1.6% in 2026**, marking **a 0.2 and 0.5 percentage point decline** from previous projections. - **Mexico’s economy** will be hit the hardest, expected to **shrink by 1.3% in 2025** and **0.6% in 2026**, rather than growing by **1.2% and 1.6%** as previously expected. - **Canada’s economy** will slow to just **0.7% growth in both 2025 and 2026**, well below the previous **2% forecast**. - **Eurozone GDP** is projected to grow **1.0% in 2025** and **1.2% in 2026**, both **down 0.3 percentage points** from prior estimates. ### **Trade Barriers, Inflation, and Investment Decline** The OECD cites several **key reasons** for the downward revision: - **Rising trade barriers** between nations - **Declining business investment** due to geopolitical and policy uncertainties - **Weakened household spending** as inflation and economic risks mount - **Disruptions to global supply chains**, impacting economic stability While tariffs may provide **short-term revenue for the U.S. government**, the OECD warns that they will impose **long-term economic costs**, making them **fiscally unsustainable**. ## **Trade War’s Impact on the U.S.: Households and Inflation** The **OECD** warns that **American households** will bear the brunt of the trade war, facing: - **Higher costs on imported goods** - **A slowdown in economic growth** - **Increased inflationary pressures** If tariffs on **all non-commodity imports** were **raised permanently by 10%**, the **OECD estimates**: - **Global GDP would decline** by **0.3 percentage points** in the second and third years. - **Global inflation would increase** by **0.4 percentage points** on average over three years. - **The U.S. economy would shrink** by **0.7 percentage points** in the third year. - **Direct costs to American households** could reach **$1,600 per household**. ### **Inflation Forecast: Higher for Longer** The **OECD** now expects **higher inflation** than previously projected: - **G20 inflation** is forecasted to drop from **5.3% in 2024** to **3.8% in 2025** and **3.2% in 2026**. - **U.S. inflation** is now expected to be **2.8% in 2025** and **2.6% in 2026**, up **0.7 and 0.6 percentage points**, respectively. With **persistent inflation**, central banks—**especially the Federal Reserve**—will likely be **forced to keep interest rates higher for longer**, further slowing economic growth. ## **Final Thoughts** The OECD warns that **Trump’s escalating tariff war** could push the **global economy into further turmoil**, with the U.S. bearing a **significant economic burden**. If trade tensions continue to rise, the **economic damage could be much worse than currently forecasted**, impacting **business investment, consumer spending, and long-term growth prospects worldwide**. **Stay tuned for further economic updates.** **Automate Your TradingView Strategies** Connect your alerts with [PickMyTrade](https://pickmytrade.io "PickMyTrade") — automated trade execution, no coding required. [Start free →](https://pickmytrade.io/pricing) For AI tools & developers:[View Markdown →](https://blog.pickmytrade.io/oecd-lowers-global-growth-forecast-warns-u-s-will-pay-a-heavy-price-for-trade-war.md)