How U.S. Tariff Hikes Are Poised to Reshape Global Growth Forecasts

Despite surprising resilience in global economic performance, the OECD warns that the most serious consequences of recent U.S. tariff increases have yet to manifest. As of August 2025, the United States had pushed the effective tariff rate on merchandise imports to roughly 19.5%—a level unseen since the early 20th century. Firms have, thus far, softened the blow through strategies like inventory stockpiling and by narrowing profit margins.
Emerging from its latest Economic Outlook Interim Report, the OECD raised the expected global growth rate for 2025 to 3.2%, up from the previous estimate of 2.9% in June, citing stronger-than-anticipated activity. Looking ahead to 2026, it predicts growth to ease to around 2.9% as the initial buffers—such as build-ups in inventory—lose their impact and trade and investment slow down.
For the United States, growth in 2025 is now forecast at 1.8%, supported by substantial AI investment, fiscal stimulus, and interest rate cuts. However, momentum is expected to decelerate to 1.5% in 2026. China’s economy is similarly revised upward: a 4.9% expansion in 2025, followed by a slowdown to about 4.4% in 2026. In the eurozone, Germany’s spending plans offer some lift, but countries like France and Italy face drag from austerity measures. Japan sees short-term gains in 2025, though 2026 promises weaker outcomes; the UK receives a modest boost in its forecast.
With inflation gradually cooling, the OECD expects major central banks—including the U.S. Federal Reserve, the Bank of Canada, the Bank of England, and those in Australia—to pivot toward easier monetary policy in the coming months. Japan, on the other hand, may begin tightening policies as its own inflation pressures persist.