According to the OECD’s most recent prediction, US President Donald Trump’s increasing trade tariffs will hinder global economy and increase inflation. Since they have been subjected to the most severe tariffs, Canada and Mexico are predicted to be most affected, but US growth is also anticipated to be negatively impacted. While Mexico is predicted to be forced into a recession, the OECD has more than cut its growth forecast for Canada in half for this year and the following year.
All imports of steel and aluminum are now subject to 25% tariffs imposed by Trump. In addition, the US has levied a 20% tax on Chinese goods and 25% tariffs on other imports from Canada and Mexico, with some exceptions.
Both the EU and Canada have declared retaliatory tariffs in response. Higher trade barriers and “increased geopolitical and policy uncertainty” are having a negative impact on household spending and investment, according to the Paris-based OECD. In contrast to the earlier estimate of 2% growth for both years, Canada’s economy is only expected to increase by 0.7% this year and in 2026. Instead of rising by 1.2% and 1.6% as anticipated, Mexico is now predicted to drop by 1.3% this year and shrink by a further 0.6% next year.
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