Jakarta. US economic growth is expected to slow to 1.6 percent this year, down from 2.8 percent in 2024, as President Donald Trump’s aggressive and unpredictable trade policies disrupt global commerce, drive up costs, and sow uncertainty among businesses and consumers, the Organization for Economic Cooperation and Development (OECD) said Tuesday.

The OECD projects the world’s largest economy will decelerate further to just 1.5 percent in 2026. Since Trump returned to the White House, average U.S. tariff rates have surged from around 2.5 percent to 15.4 percent, the highest since 1938. These tariffs are increasing costs for consumers and for American manufacturers dependent on imported raw materials and components.

Global economic growth is also forecast to slow, dipping to 2.9 percent in 2025 and remaining there through 2026, compared with 3.3 percent in 2024 and 3.4 percent in 2023. Though the world economy has remained relatively resilient amid shocks like the COVID-19 pandemic and Russia’s invasion of Ukraine, Trump’s sweeping tariffs and erratic implementation have clouded the outlook.

Breaking from decades of US policy promoting free trade, Trump has imposed a 10 percent blanket tariff on imports from nearly every country, along with targeted duties on steel, aluminum, and automobiles. He has also threatened to double tariffs on steel and aluminum to 50 percent.

Though not mentioning Trump by name, OECD Chief Economist Álvaro Pereira noted in a commentary accompanying the report that “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.”

Legal uncertainty is also mounting. A federal court in New York last week blocked most of Trump’s tariffs, ruling that he had exceeded his authority. However, an appeals court has allowed the administration to continue collecting the tariffs while the case proceeds.

China, the world’s second-largest economy, is forecast to see growth slow from 5 percent in 2024 to 4.7 percent in 2025 and 4.3 percent in 2026. Trump’s tariffs are expected to further strain Chinese exports amid an ongoing property market crisis. Beijing has responded with stimulus measures, including interest rate cuts, expanded bank lending, and increased funding for factory upgrades and elder care.

In Europe, the 20 countries that use the euro are projected to see modest growth, improving from 0.8 percent in 2024 to 1 percent in 2025 and 1.2 percent in 2026, supported by expected interest rate cuts by the European Central Bank.

The Paris-based OECD, which has 38 member countries, promotes global economic cooperation and regularly issues forecasts and policy analyses.

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