OECD Projects U.S. Economic Growth to Slow to 1.6% in 2025

The Organization for Economic Cooperation and Development (OECD) has forecast a slowdown in U.S. economic growth to 1.6% for 2025, down from 2.8% in the previous year. The global economic body cited rising trade barriers, increased uncertainty in trade policy, and ongoing geopolitical tensions as key factors influencing the deceleration.

The OECD also projects the U.S. economy—the largest in the world—will slow further to 1.5% in 2026. The report attributes much of the weakened outlook to ongoing volatility in trade policy, particularly a wave of import tariffs implemented under President Donald Trump’s administration.

Without naming Trump directly, OECD Chief Economist Álvaro Pereira stated, “We have seen a significant increase in trade barriers as well as in economic and trade policy uncertainty. This sharp rise in uncertainty has negatively impacted business and consumer confidence and is set to hold back trade and investment.”

According to the OECD, average U.S. tariff rates have climbed from approximately 2.5% to 15.4%—the highest level since 1938. These elevated tariffs have led to increased costs for both American consumers and manufacturers who depend on imported materials and components.

The global economic outlook is similarly cautious. The OECD predicts world GDP growth will slow to 2.9% this year and remain at that level through 2026. This compares to global growth rates of 3.3% in 2024 and 3.4% in 2023. The slowdown reflects not only U.S. trade policy but also broader issues such as the lingering effects of the COVID-19 pandemic and geopolitical events like the war in Ukraine.

China, the world’s second-largest economy, is also expected to see declining growth. Projections show Chinese GDP growth falling from 5% in 2024 to 4.7% in 2025 and 4.3% in 2026. The nation continues to grapple with a weakened property sector and reduced export demand due in part to U.S. tariffs. Beijing has responded with a series of stimulus measures, including interest rate cuts, increased bank lending, and funding for industrial modernization and elder care.

Meanwhile, the eurozone economy is forecast to grow modestly, from 0.8% in 2024 to 1.0% in 2025 and 1.2% in 2026, supported in part by expected interest rate reductions from the European Central Bank.

The OECD, a Paris-based organization with 38 member countries, regularly publishes economic reports to inform international policy and promote global economic growth.