US Faces Stunted Growth and Soaring Inflation from Tariffs, OECD Warns

The global economy is teetering on the edge, and the US is at the heart of the storm.

According to a recent OECD Economic Outlook, President Donald Trump's aggressive tariff policies are set to choke US economic growth to a mere 1.6% in 2025, down from 2.8% last year, while pushing inflation towards 3.9% by year-end.

These sweeping import duties, now at a staggering 15.4%, the highest since 1938, are rippling across global markets, hitting consumers and businesses hard. From retail giants to small manufacturers, the fallout is reshaping strategies and squeezing wallets.

But what does this mean for the average shopper, and how can businesses navigate this turbulent landscape?

Brace for Higher Prices Now

The OECD report paints a grim picture: tariffs are driving up costs for US importers, who pass these onto consumers.

Retailers like Walmart face a tough choice, absorb the hit or raise prices. A Reuters analysis notes that US households will bear the brunt, with inflation projected to climb from 2.5% in 2024 to 2.8% in 2025, potentially nearing 4% by December.

Small retailers, unable to shoulder the costs, are already warning of price hikes between 14% and 35%.

On X posts, sentiment echoes this concern, with users lamenting rising costs for everyday goods like clothing and electronics.

For consumers, this means tighter budgets and fewer choices, unless businesses get creative.

Adapt Supply Chains Fast

The tariff squeeze is forcing companies to rethink their supply chains. The OECD highlights how higher import costs and policy uncertainty are dampening corporate investment and consumer confidence.

Some firms are exploring domestic manufacturing to bypass tariffs, but this shift isn't cheap, retooling factories could cost billions.

Others are diversifying suppliers, looking to countries like Vietnam or India to sidestep the worst of the levies.

However, the same Reuters report warns that prolonged trade barriers could disrupt global supply chains further, potentially costing the US economy more than the tariff revenue gained.

Businesses that act swiftly to localise or diversify stand a better chance of keeping costs down and staying competitive.

Seize Opportunities Amid Chaos

While tariffs spell trouble, they also open doors for savvy players. The OECD suggests that technology, particularly AI, could boost US productivity, offering a silver lining.

Companies investing in automation or robotics might offset tariff-driven costs and gain a market share edge. For instance, firms that streamline operations or negotiate better supplier terms could keep prices stable, winning over cost-conscious shoppers.

The challenge is balancing short-term pain with long-term gains, something not all businesses can afford.

As X posts reflect, some consumers are already praising brands that hold prices steady, hinting at loyalty rewards for those who adapt effectively.

Navigate Tariffs or Sink Trying

The OECD's warning is clear: US tariffs are a double-edged sword, slashing growth while fuelling inflation. With global GDP growth trimmed to 2.9% for 2025, the stakes are high for businesses and consumers alike.

The path forward demands ingenuity, whether through smarter supply chains, tech investments, or price-stabilising strategies.

As the US navigates this economic minefield on 04 June 2025, one thing is certain: those who adapt will thrive, while those who don't risk being left behind.

The global economy is watching, and the US must choose its next steps wisely, or pay a steeper price than any tariff could impose.

Originally published on IBTimes UK