BY NATHAN LAYNE AND LEIGH THOMAS
PARIS- President Donald Trump’s tariff hikes will drag down growth in Canada, Mexico and the United States while driving up inflation, the OECD forecast on Monday, just as Trump promised to press ahead with a new wave of levies in early April.
Trump, speaking aboard Air Force One on route to Washington overnight, also repeated he had no plans to create exemptions for the 25 percent steel and aluminum tariffs that went into effect last week.
The Organization for Economic Cooperation and Development estimated in an economic outlook update that US households will pay a high direct price from the new import taxes, and the likely economic slowdown will cost the US more than the extra income the tariffs are supposed to generate.
Global growth is on course to slow slightly from 3.2 percent in 2024 to 3.1 percent in 2025 and 3.0 percent in 2026, the Paris-based policy forum said, cutting its projections from 3.3 percent for both this year and next in its previous economic outlook, issued in December.
It said US economic growth was seen slowing this year to 2.2 percent – versus 2.4 percent in the OECD’s earlier estimate – and would lose more steam next year, with growth now estimated at 1.6 percent, down from 2.1 percent previously.
The Mexican economy, meanwhile, would be hit hardest by the tariff hikes, contracting 1.3 percent this year and a further 0.6 percent next year instead of growing 1.2 percent and 1.6 percent as previously expected. Canada’s growth rate would slow to 0.7 percent this year and next, well below the 2 percent previously forecast for both years.
The OECD report is the latest to project that North American growth would be stymied by Trump’s tariffs, which have also torpedoed a range of measures of US household and business sentiment.
On Friday the University of Michigan reported that US consumer sentiment plunged to a nearly 2-1/2-year low in March and inflation expectations soared amid worries over tariffs. And on Monday a gauge of factory activity in New York State from the Federal Reserve Bank of New York plummeted by the most in nearly two years and input costs surged, and a separate survey of home builders showed sentiment was the lowest in seven months. — Reuters
