The world and U.S. economy are facing major threats to growth that could start as soon as the second half of the year and persist into 2026 thanks to President Donald Trump’s tariffs. That’s the outlook from the Organisation for Economic Co-operation and Development (OECD), the international, multilateral organization with the mission of driving the highest possible economic growth for the world.
Fallout from tariffs is especially salient, the OECD warned.
“The impacts of higher tariff rates are yet to be fully felt in the US economy,” the organization wrote in its Tuesday report.
The full economic shock of tariffs, however, may kick in as soon as this year, the OECD said.
“Growth is expected to soften noticeably in the second half of this year, as front-loading activity unwinds and higher effective tariff rates on imports to the United States and China dampen investment and trade growth.”
For now, the OECD has lifted its prediction of global growth to 3.2% for the year, up from the 2.9% it forecasted in June. Predicted U.S. growth rose to 1.8%, an uptick from the 1.6% predicted in June. Still, the OECD warned it had not revised global or U.S. prospects for next year, and the outlook is not good.
Driving the upward revisions were efforts by industry to front-load trade to avoid the worst of U.S. tariffs earlier this year. Large investments in AI companies have also helped boost the world economy’s outlook, the OECD said.
“Reductions in trade restrictions or faster development and adoption of artificial intelligence technologies could strengthen growth prospects,” the OECD wrote in the report.
