Trade Turmoil Set to Dampen Growth in Canada and Mexico Amid Rising Tensions**

The latest OECD forecast indicates severe growth reductions for Canada and Mexico due to US tariffs, while inflation is expected to rise globally as trade tensions escalate.**

Trade tensions are intensifying, and both Canada and Mexico are poised to experience significant economic downturns, according to the OECD's grim new forecast. The organization has slashed its growth projections for Canada and Mexico, attributing these changes to the escalating tariffs imposed by the US under President Trump.

The stringent tariffs, which include a 25% levy on steel and aluminum imports, have severely impacted the economies of both neighboring nations. The OECD now anticipates Canada's growth to plummet to a mere 0.7% this year and into 2026, down from previous estimates of 2%. Meanwhile, Mexico is forecast to enter a recession, with an expected contraction of 1.3% this year and a further decline of 0.6% next year, contrasting sharply with earlier estimates predicting modest growth.

The United States itself is not exempt from the fallout of its trade policies; the OECD has downgraded its growth outlook for the US as well, now projecting a growth rate of 2.2% for this year, reduced from earlier forecasts of 2.4%. Although US growth appears somewhat resilient compared to its neighbors, the ongoing trade turmoil is still expected to raise inflation rates.

In retaliation for the tariffs, Canada and the European Union have announced their own counter-tariffs, adding to the complexity of the situation. The OECD highlighted that rising trade barriers and geopolitical uncertainties are undermining investment and consumer spending, leading to a slowdown in global growth predictions—projected to decrease from 3.2% in 2024 to 3.1% in 2025.

Furthermore, companies like Tesla have voiced concerns over the ramifications of the trade battle, noting that US exporters could face significant challenges due to retaliatory measures from other countries. The OECD has also adjusted its growth forecasts downward for the UK economy, indicating a challenging climate across several nations due to the unfolding trade conflict.

As tensions continue to escalate, experts warn of significant risks to the global economy, with potential for further fragmentation and greater inflationary pressures. These developments will likely impact economies worldwide, highlighting the urgent need for resolutions amid growing trade disputes.