Canada and Mexico growth forecasts slashed by OECD

Donald Trump’s increase in trade tariffs will affect world growth and increase inflation, the latest predictions.

Canada and Mexico are expected to have the biggest impact because they have the most severe tariffs, but US growth is also expected to be hit.

The OECD has reduced the growth prospects of Canada this year and the following year, and Mexico expects to fall into a recession.

Trump has imposed 25%tariffs on all steel and aluminum imports. The United States also imposed a 25%tariff on other income from Mexico and Canada.

As a result, Canada and the EU announced retaliation tariffs.

Headquartered in Paris, OECDs said that higher trade barriers and “increasing designated and policy uncertainty” are hitting investments and household spending.

In the latest prediction of the OECD:

• Canada’s economy is expected to grow compared to 0.7%this year and 2%for two years in 2026.
• Mexico is currently expected to sign a 1.3% contract this year, and as expected, it will decrease by 0.6% next year instead of 1.2% and 1.6%.
• The growth of the United States was lowered and decreased from 2.2%this year, 1.6%in 2025, 2.4%and 2.1%of previous predictions.
• Despite the US imposing tariffs on China, the OECD has increased its growth forecast to 4.8%.

The OECD said that the trade war under development was set to strengthen inflation, which means that interest rates are more likely to be higher for longer.

“There is still a serious danger,” he warned. “The further division of the world economy is the main concern.

“If the trade barrier increases and increases extensively, it will grow and add inflation worldwide.”

The OECD said the global economy will slow down from 3.2%in 2024 to 3.1%in 2025.

last week, Elon Musk’s electric vehicle company, Tesla, warned Other US exporters can be damaged by trade battles.

In a letter to the US trade manager, the company said that if other countries retaliated with Trump’s tariffs, US exporters were “exposed to unbalanced impacts.”

The OECD reduced the growth of the UK economy in 2025 from 1.7%and 1.2%in 2026 to 1.3%to 1.2%.

But early this month, the UK’s growth prediction is more optimistic than the British Bank, which has reduced it to 0.75%in 2025.