The numbers are in, folks—and they're not pretty. The OECD just delivered a sobering assessment of where the global economy is headed, and the forecast looks about as sunny as Seattle in November.
Global growth projections? Slashed. U.S. economic expansion? Nearly cut in half—from a robust 2.8% down to a limping 1.6%. The culprit behind this economic slowdown isn't exactly a mystery. It's those tariffs. You know, the ones that were supposed to make America great again.
I've been covering trade policy since before most people could spell "protectionism," and there's a pattern here that's painfully familiar. When countries start slapping taxes on imports and calling it "getting tough," everybody loses. Everybody.
The thing about tariffs—and this is something economists have understood for literally centuries—is that they function essentially as a self-imposed tax. We're basically standing at the border, watching goods arrive, and declaring, "These would be too affordable for American consumers! Quick, make them more expensive!"
Look, I get the appeal. Tariffs sound tough. They feel like action. There's something viscerally satisfying about the idea of punishing other countries for their trade practices.
But that satisfaction comes with a price tag.
The OECD's chief economist, Alvaro Pereira, tried to be diplomatic about it. He noted that "weakened economic prospects will be felt around the world, with almost no exception." Translation from economist-speak: we've managed to design a policy that hurts literally everyone, ourselves included.
(I was at an economic forum last month where three different economists used the phrase "unforced error" within about 15 minutes of each other when discussing current trade policy. Not exactly a vote of confidence.)
What's particularly fascinating—and by fascinating, I mean deeply frustrating—is how quickly these effects are materializing. These aren't theoretical long-term projections we're talking about. The damage is showing up in the data now.
Businesses hate uncertainty. When they don't know what trade rules will look like six months from now, they freeze. Investment decisions get delayed. Hiring slows. Supply chains get reconfigured—often inefficiently. All of this creates drag on economic momentum precisely when we need it most.
I spoke with several manufacturing executives last week who described being caught in what one called a "policy pretzel"—trying to plan production while navigating constantly shifting trade barriers.
"We've redrawn our supply chain three times in eighteen months," one told me, exasperation evident in his voice. "Each time it costs millions. And for what?"
For what, indeed.
The timing of the OECD's warning couldn't be more awkward, coinciding with a major gathering of trade ministers in Paris. I can just imagine the strained small talk at the reception. "Lovely weather we're having. Sorry about decimating your export sector."
There's a historical irony here that shouldn't be overlooked. The Smoot-Hawley tariffs of 1930 didn't cause the Great Depression, but they sure as hell made it worse. We've known this for nearly a century. And yet...
Here we are again.
Now, some will argue that strategic tariffs can address legitimate national security concerns or counter unfair trade practices. That's theoretically true. But in practice? These targeted exceptions tend to multiply like rabbits, driven more by political calculations than sound economic reasoning.
The OECD was unusually blunt in its assessment: easing trade tensions is "by far the most important policy priority" for reviving growth. Not interest rate cuts. Not tax policy. Just stop the trade war.
The most painful part? The very voters who were promised economic benefits from tariffs will likely feel the negative effects most acutely. Rural communities. Manufacturing regions. Places where every extra dollar on basic goods really matters.
Which seems... well, not ideal doesn't quite cover it.
Markets haven't fully priced in this slowdown yet—another worrying sign. It's what I call the "selective hearing" phenomenon, where investors filter out the bad news that doesn't fit their preferred narrative.
That bubble will burst eventually. They always do.
The fundamental issue isn't really about tariffs specifically. It's about the persistent belief that economic policy can somehow defy basic principles without consequences. It's like thinking you can repeal gravity through sheer force of personality.
Spoiler alert: you can't.
So here we are, watching in real time as a policy mistake ripples through the global economy. The OECD report isn't just another document to file away—it's a warning siren.
Too bad nobody seems to be listening.
