The Organisation for Economic Co-operation and Development (OECD) has adjusted its growth forecast for the global economy, projecting a slowdown to 2.9% in 2025, a reduction from the earlier estimate of 3.1%. The driving force behind this downward revision, according to the OECD, is the impact of increased trade barriers, notably the recent tariffs imposed by the U.S. The organisation underscores how these measures are not only stifling economic growth but are also likely to trigger widespread supply chain disruptions and persistent inflationary pressures.
The U.S. economy is expected to experience even more sluggish growth, with a forecasted expansion of just 1.6%, down from 2.2%. The initial effects of these tariffs have already been felt, as evidenced by a contraction of 0.2% in the first quarter of 2025—the first decline since 2022. In a statement released by the OECD, the organisation cautioned that “further trade fragmentation could intensify the slowdown and trigger significant supply chain disruptions,” highlighting the precarious balance in current global trade relations.
Corporate responses to these evolving trade dynamics are indicative of the heightened unpredictability. Major companies are recalibrating their operations in expectation of continued trade tension. Automaker Ford has begun investing heavily in domestic production facilities as a means to mitigate exposure to tariffs and cultivate local supply chains. Similarly, HP has pivoted towards sourcing strategies that minimise vulnerability to sectors most impacted by tariffs, thereby protecting itself from sudden cost surges.
The shift in corporate strategy reflects a broader trend of companies moving from a focus on low-cost sourcing to a more resilient approach aimed at enduring the challenges posed by tariffs. Executives are increasingly utilising real-time analytics and scenario planning to assess the potential financial effects of tariff changes on supply chain stability. In this environment, flexibility has become paramount, with businesses exploring dual sourcing and regional diversification as tactics to bolster their resilience against market shocks.
This revised outlook from the OECD mirrors concerns echoed in several analyses from other leading economic institutions. The IMF has similarly warned that U.S. tariffs could undermine the global economy and increase inflation rates, projecting that inflation could rise by as much as 2-3 percentage points in 2025 due to these policies. According to Deloitte, the ripple effects of these tariffs could lead to increased prices for consumers as businesses pass on elevated costs associated with imports.
Moreover, the implications of these tariffs are felt beyond immediate economic forecasts; they are reshaping key sectors, resulting in increased inventory storage as businesses hedge against the unpredictability of supply deliveries. The Logistics Managers’ Index (LMI) recorded a significant growth rate of 62.8 in February 2025, signalling a notable shift as firms adapt to the logistical challenges posed by new trade realities.
As the business landscape evolves amid heightened geopolitical tensions and economic uncertainty, the OECD’s revised forecast is a clarion call for supply chain leaders. Rather than relying on the hope for stable trade conditions, companies are compelled to embed flexibility and resilience into their sourcing and supplier management strategies. This proactive stance—focusing on diversified supply networks and enhanced analytics—could prove essential in navigating the complex and often perilous terrain of international trade in the coming years.
The current economic environment thus underscores the necessity for corporate leaders to adopt pragmatic approaches, prioritising adaptability over predictability, and preparing for the ongoing evolution of global trade.
Source: Noah Wire Services
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