Public frenzy over the Trump administration’s tariffs may have cooled with various trade deal announcements. But the full cost implications from tariffs are still to come, according to a report the Organisation for Economic Co-operation and Development released Tuesday. The intergovernmental group projects that U.S. and global economies will slow in the coming months, in large part due to tariffs.
Global growth turned out to be more resilient than anticipated in the first half of 2025, with manufacturing and trade “buoyed by front-loading ahead of higher tariffs,” according to the global policy forum, which has 38 member countries. That contributed to the world economy expanding at an annualized pace of 3.2%.
The front-loading, stocking up on material and product purchases before tariffs take effect, “was an important source of support, with industrial production growth in the first half of the year exceeding the average pace of 2024 in most G20 economies,” the report said. But front-loading has ended in most places, and uncertainty is dampening investments and trade.
Therefore, OECD projects global gross domestic product growth will weaken from 3.3% in 2024 to 3.2% in 2025 and to 2.9% in 2026. In the United States, annual GDP growth is projected to drop more precipitously, from 2.8% in 2024 to 1.8% in 2025 and 1.5% in 2026, with tariffs as a leading cause of decline.
Global and U.S. GDP growth projected to decline through 2026
OECD suggests the greatest tariff cost impacts are still to come because the changes are being phased in over time. “The impacts of higher tariff rates are yet to be fully felt in the US economy,” the report says.
As of the end of August, the effective tariff rate on U.S. merchandise imports rose to an estimated 19.5%. This marks the highest tariff rate since 1933, according to OECD, and was 4.1 percentage points higher than the rate in mid-May. The report also pointed to higher sectoral tariffs, namely for metals.
In some cases, tariff costs already are being passed down to consumers through higher prices, especially durable goods with a high import content, the report says.
