OECD Warns U.S. Faces 2026 Slowdown from Tariffs

The Organization for Economic Cooperation and Development (OECD) said the U.S. and global economies are likely to slow less this year than previously expected. However, as tariff hikes increasingly weigh on economic activity, momentum will erode further into 2026.

The OECD projects U.S. GDP growth at 1.8% this year, slowing to 1.5% in 2026.

Chief Economist Alvaro Pereira noted: “Growth is somewhat more resilient than we expected, but some indicators are weakening. As the boost from companies building inventories ahead of tariff increases fades, the slowdown in the second half of the year will be more pronounced than in the first.”

The OECD warned that further tariff hikes or a resurgence in inflation could slow growth more than anticipated. A sharp and sudden decline in stock markets, if investors grow more uneasy about risks, could also damage the outlook.

The organization estimated that the effective U.S. tariff rate on imports rose from 15.4% in mid-May to 19.5% by late August—the highest since 1933. It cautioned that the full effects have not yet been felt in the U.S. economy, and inflation is projected to rise from an average of 2.7% this year to 3% in 2026.

“The impact of tariff increases has not yet fully appeared in the U.S. economy,” the OECD said. “This reflects several factors, including companies using inventories and strong profit margins to absorb early effects, lags between announcement and implementation, and exemptions for goods already in transit.”

High levels of investment in new technologies have supported U.S. activity but are not enough to offset tariff pressures. Declining net immigration and reduced federal employment are also expected to slow growth.