Tariff Turmoil: Trump’s Trade War Sinks Canada’s Hopes, Mexico’s Economy

The Organisation for Economic Co-operation and Development (OECD) has revised downward its global GDP forecasts for the current and upcoming years. Notably impacted are Mexico and Canada, particularly under the leadership of Mark Carney.

Global Economic Outlook Downgraded

According to the OECD, the worldwide economy is navigating “uncertainty” due to the impact of trade disputes initiated by Donald Trump, which are curbing expansion and raising concerns about inflation.

In its most recent assessment, the Paris-based organization lowered its projections for global GDP for this year and the next. Mexico and Canada, neighboring the United States, are expected to be the most affected.

Impact on North American Economies

Both Mexico and Canada have faced substantial tariffs of 25 percent imposed by the US President. This measure is anticipated to push Mexico into a recession and significantly impede Canada’s economic growth.

Specific Projections:

• Mexico’s economy is projected to shrink by 1.3 percent this year and by 0.6 percent in 2026.
• Canada’s growth forecast has been adjusted to 0.7 percent for both 2025 and 2026, a reduction from the previously anticipated 2 percent.

The United States will also experience some adverse effects, with its growth outlook revised from 2.4 percent to 2.2 percent for this year, and from 2.1 percent to 1.6 percent for 2026.

However, the OECD does not foresee a “Trumpcession” in the US, despite the potential for tariffs to increase prices and disrupt supply chains across the continent.

The reduced growth outlook for Canada presents challenges for Prime Minister Mark Carney, the former Bank of England governor, who recently met with the King in London.

The United Kingdom’s economic prospects have also been downgraded, largely due to stagnant growth since the Labour party took office in July.

The UK’s forecast for 2025 was lowered from 1.7 percent to 1.4 percent, and for the following year, from 1.3 percent to 1.2 percent.

In the Eurozone, the economy is predicted to grow by 1 percent this year, down from 1.3 percent, and by 1.2 percent in 2026, a decrease from 1.5 percent.

Overall, the global economy is expected to grow by 3.1 percent this year, a reduction from the previously anticipated 3.3 percent, and by 3 percent in 2026, also down from 3.3 percent.

OECD Secretary-General Mathias Cormann indicated that recent financial data suggests declining business and consumer confidence in several major economies.

He added that there had been a significant increase to very high levels of “indicators of economic and trade policy uncertainty.”

Cormann attributed the global growth downgrade, in part, to “the imposition, or threat, of new tariffs and the associated rise in policy and geopolitical uncertainty.”

Further risks could emerge if the tariff disputes escalate, potentially creating “trade fragmentation,” which would weigh on growth and drive up prices.

Increased upward pressure on inflation could also prompt central banks to raise interest rates beyond current expectations.

OECD Chief Economist Alvaro Santos Pereira stated, “We are steering through uncertainty.”

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