US President Donald Trump’s trade war will cause more economic damage than expected in both the US and any other country, according to the organization’s new predictions for economic cooperation and development.
In a report released on Tuesday (3), the group of 38 nations-mostly rich-dramatically reduced its prediction of economic growth to the United States by 2025 to 1.6% compared to the 2.2% designed in March and said the growth will be even weaker next year.
The report highlights uncertainty and chaos around Trump’s fares, as well as its potential to cause lasting damage worldwide.
The Paris -based organization cited higher rates, including retaliatory rates imposed on US exports, a slowdown in net immigration and a “considerable reduction” in the federal workforce.
The OECD also expects the global economy to suffer a sharp slowdown for a 2.9% growth in both this year and the next – a relegation in relation to its previous predictions of 3.1% and 3%, respectively.
This is based on the assumption that tariffs around the world will remain at their levels of mid -May, according to the OECD.
“If everyone starts increasing tariffs around the world […] We’ll end up in a world where everyone will be worse, ”said OECD chief economist Alvaro Pereira, Zain Asher, from CNN.
“Commerce has been one of the engines of growth and prosperity in recent decades, taking ‘about one billion people’ out of poverty,” he said.
Instead, the rates and the global trade war increased uncertainty, the OECD said in her report.
“The global economy has gone from a period of resilient growth and decline inflation to a more uncertain path,” OECD Secretary General Mathias Cormann said in a statement.
“Current political uncertainty is weakening trade and investment, reducing consumer and business confidence and reducing growth prospects.”
In its economic perspective report, the OECD said it expects deceleration to be “concentrated” in the US, Canada, Mexico and China – four of the countries most affected by new Trump tariffs.
Since resumed in January, US president has increased import rates on most US business partners and major products, including cars and steel.
Although its tariff plan has bumped into a legal obstacle last week, a round of punctively high “reciprocal tariffs” is expected to reach many of the United States business partners from July 9 unless they can reach an agreement with Washington.
Tariffs, their erratic implementation and the unpredictability that both injected into the global economy are weighing on many companies and consumers.
According to the OECD, new US import taxes, in combination with retaliatory trade barriers erected by China and Canada, are “pointing to a much larger disturbance than during the US and China commercial tensions in 2018 and 2019” – a reference to the trade war during Trump’s first term.
The OECD said new tariffs risk inflation in the countries that impose them and that central banks – which increase interest rates to slow price increases – must “remain vigilant.”
On the other hand, Trump publicly pressured US President Jerome Powell, to reduce the cost of loans in the United States, while Powell preferred to wait to see how the president’s fares will affect the world’s largest economy before deciding whether to cut or increase rates.
