Tariff turmoil likely to slow global economy this year

President Donald Trump's efforts to reshape global trade with punitive tariff policies are pushing the United States and major economies towards slower economic growth, increasing uncertainty, and cooling investment and trade, according to projections released Tuesday.

- LIZ ALDERMAN

The full impact of the higher US tariffs is still playing out, but effects are beginning to be felt by American consumers, who are starting to curb spending, and in labour markets in countries where the duties have led companies to shed workers or decrease hiring, the Organization for Economic Cooperation and Development, an intergovernmental group based in Paris, said in its latest outlook.

The global economy is forecast to grow 3.2% this year, compared with 3.3% in 2024. The estimate is a touch larger than previously expected because America’s trading partners ramped up manufacturing to get their goods across the US border before the tariffs kicked in, the organisation said.

Trump imposed tariffs, including duties of up to 50% on foreign steel and aluminium, on once-close trading partners like the European Union, Canada and India, as well as on longtime rivals like China. The new overall effective US tariff rate — now at an estimated 19.5%, the highest since 1933 — has slowed economic and trade activity.