Trade tariffs, higher interest rates are slowing global growth, OECD says

“We’re returning to the long-term trend. We’re not expecting a hard landing, however, there’s a lot of risks. A soft landing is always difficult,” the OECD’s chief economist, Laurence Boone, told Reuters.

Trade flows between the U.S. and China have slowed after a tit-for-tat escalation in tariffs by Washington and Beijing. The stalled Brexit negotiations over Great Britain’s looming departure from the European Union have also raised uncertainty about the impact on trade flows between the EU and U.K.

An escalation of trade tensions could cut global GDP growth by as much as 0.8 percent by 2021, according to the latest OECD estimates. Thanks in part to the stimulus effect from broad tax cuts, the OECD’s forecast for the United States in 2018 and 2019 was unchanged from the group’s September projection, which calls for GDP growth of nearly 3.0 percent this year and next to slightly more than 2.0 percent in 2020 as the stimulus effect of tax cuts eases and higher tariffs begin to cut into corporate profits.