The OECD has predicted that trade turmoil will significantly impact the economies of Canada and Mexico, while also affecting US growth. The organization’s latest forecast suggests that Canada’s economy is expected to grow by just 0.7% this year and in 2026, down from its previous forecast of 2%. Mexico is now forecast to contract by 1.3% this year and shrink a further 0.6% next year.
US President Donald Trump’s imposing of 25% tariffs on steel and aluminum imports has had the harshest impact, particularly on Canada and Mexico. The US has also imposed tariffs on other imports from these countries, with some exemptions, and a 20% levy on Chinese goods.
The OECD warned that higher trade barriers and increased geopolitical uncertainty are hitting investment and household spending. As a result, inflation is expected to rise, leading to higher interest rates for longer. The forecast suggests that global growth will slow from 3.2% in 2024 to 3.1% in 2025.
The UK’s economy has also been downgraded, with growth forecast to be 1.4% in 2025 and 1.2% in 2026, down from its previous forecasts. In contrast, the US is expected to see a slight increase in growth to 4.8%.
Source: https://www.bbc.com/news/articles/c9wpq0g10xjo