OECD Says US GDP Growth to Slow Next Year as Tariffs, Lower Immigration Weigh on Economy

The Organisation for Economic Co-operation and Development on Tuesday raised its growth forecast for the U.S. economy in 2025 on the back of investing around the AI boom, but noted that tariffs and lower net immigration are taking a toll and would lead to slowing growth next year.

The OECD said it expects the U.S.’s annual real gross domestic product growth rate to come in at 1.8% in 2025, up from its 1.6% projection in June. That is, however, well below the 2.8% GDP growth registered in 2024.  U.S. GDP is projected to rise by just 1.5% next year.

“Strong AI-related investment boosted outcomes in the United States,” the Paris-based body said, but also noted that GDP growth is falling from 2024 as “strong investment growth in high technology sectors is more than offset by higher tariff rates and a drop in net immigration.”

The OECD said that the overall effective tariff rate in the U.S. rose to around 19.5% at the end of August, the month when President Donald Trump’s “reciprocal” tariffs went into effect. That is the highest rate since 1933, it said. The OECD also noted a softening in U.S. labor markets.

The OECD also raised its projections for economic expansion around the world, noting that “global growth was more resilient than anticipated in the first half of 2025, ” particularly in many emerging markets, which front-loaded their exports into the U.S. and supported their economies.

The OECD now expects global growth of 3.2% this year, up from the 2.9% expansion it had forecast in June, but below the 3.3% notched last year. It maintained its global growth forecast for next year of 2.9%.