Trump’s tariffs could drag global economy back to COVID-19 peak lows, OECD warns

The Paris-based Organization for Economic Co-Operation and Development (OECD) cautioned that President Donald Trump’s sweeping tariffs and the persistent uncertainty surrounding US trade policy could trigger "significant disruptions" to global supply chains—already battered by the COVID-19 pandemic.

According to the OECD’s latest economic outlook, global trade growth is projected to slow sharply over the next two years, Caliber.Az reports.

In the first three months of the year, economic growth in the countries monitored by the organization, “dropped abruptly” to 0.1 percent from the last three months of 2024, which is “the slowest rate of growth since the peak of the COVID-19 pandemic some five years ago,” OECD Secretary-General Mathias Cormann said.

The slowdown comes in the wake of widespread front-loading by importers anticipating future tariff hikes and amid mounting hesitation from businesses to invest in an unstable trade environment.

"Global trade growth is likely to slow substantially over the next two years, after significant front-loading ahead of expected tariff increases, and uncertainty is expected to hold back business investment," the report states.

Since taking office, Trump has repeatedly announced—and later delayed—a series of tariffs aimed at shrinking the U.S. trade deficit and reviving domestic manufacturing. The tariffs, initially implemented in early April, have affected nearly all U.S. trading partners, leading to a web of ongoing negotiations and legal battles.

Adding to the turbulence, the U.S. Court of International Trade briefly struck down the majority of these levies last week, only for a federal appeals court to stay the ruling the following day—leaving the tariffs in legal limbo. In the immediate aftermath, Trump escalated his hardline stance by proposing a doubling of tariffs on aluminium and steel imports, heightening concerns among businesses and trade partners alike.

“The global economy has shifted from a period of resilient growth and declining inflation to a more uncertain path,” Cormann warned.

He urged governments to engage in constructive dialogue to resolve trade disputes and uphold the rules-based international trading system.

“Governments need to engage with each other to address any issues in the global trading system positively and constructively through dialogue—keeping markets open and preserving the economic benefits of rules-based global trade for competition, innovation, productivity, efficiency and ultimately growth,” Cormann said.

By Khagan Isayev