### Economic Outlook 2023: U.S. Growth Expected to Decelerate Amidst Trade Uncertainties

In a turn of events influenced by President Donald Trump's trade policies, the U.S. economy is projected to slow significantly this year. The Organization for Economic Cooperation and Development (OECD) predicts a drop in U.S. economic growth to 1.6%, down from the more robust 2.8% recorded last year. This decline is attributed to disruptions caused by erratic trade wars that have stoked global uncertainty, increased costs, and left businesses in a state of paralysis.

The OECD also foresees a continued downward trend, projecting the U.S. growth rate to ease further to 1.5% by 2026. Since Trump's return to office, U.S. tariff rates have surged from approximately 2.5% to an unprecedented 15.4%, the highest since 1938. These increased tariffs have made imported raw materials and components more expensive, negatively affecting both consumers and American manufacturers.

Globally, economic growth is also expected to decelerate, dipping to 2.9% this year and maintaining that rate through 2026, marking a decline from 3.3% last year and 3.4% in 2023. The global economy has shown resilience in the face of disruptions like the COVID-19 pandemic and geopolitical tensions such as Russia's invasion of Ukraine. However, the unpredictable nature of Trump's sweeping tariffs, which include 10% levies on imports from nearly every country and specific duties on steel, aluminum, and autos, is clouding the trade landscape.

These developments have reversed longstanding U.S. policies that favored free trade, and they bring with them the threat of retaliatory actions from other nations. Adding to the uncertainty, a federal court in New York recently blocked most of Trump's tariffs, although an appeals court has allowed their continued collection during ongoing legal battles.

China's economy, the world's second-largest, is also feeling the strain, with projected growth to decelerate from 5% last year to 4.7% by 2025 and further to 4.3% by 2026. The tariffs are expected to hit Chinese exporters hard, exacerbating the struggles of an economy already beleaguered by a collapsing real estate market. However, the Chinese government plans to counteract some of these effects through measures such as interest rate cuts, increased bank lending, and financial support for factory upgrades and elder care.

In contrast, the 20 countries that share the euro currency are expected to see modest economic improvements. Growth is projected to rise from 0.8% last year to 1% in 2025 and 1.2% by next year, aided by interest rate cuts from the European Central Bank.

The OECD, based in Paris and consisting of 38 member countries, continues to monitor and report on international trade and economic progress. In a commentary accompanying the forecast, OECD chief economist Álvaro Pereira highlighted the significant rise in trade barriers and policy uncertainty, noting its adverse effects on business and consumer confidence as well as trade and investment activities globally.