Illogical Tariffs: US Economic Forecast Dips Faster Than a Vulcan Mind Meld Gone Wrong

A Most Illogical Premise

Fascinating. The Organisation for Economic Co operation and Development (OECD) has adjusted its projections and not in a manner that would please Captain Kirk. Economic growth forecasts for the United States and globally have been… adjusted downward. It appears President Trump's tariff policies are creating ripples not unlike those caused by disrupting the space time continuum though hopefully with less risk of encountering a Romulan warbird. The U.S. growth outlook is now a mere 1.6% this year and 1.5% in 2026. To put this in perspective that's slower than a Gorn's diplomacy. It seems a 2.2% expansion in 2025 was deemed…optimistic.

The Prime Directive of Economics Apparently Ignored

The reasons cited are logically consistent: fallout from Trump's tariffs elevated economic policy uncertainty a slowdown of net immigration and a smaller federal workforce. Global growth is also projected to be lower. The OECD notes the slowdown is heavily concentrated in the United States Canada and Mexico. One might say it is as if they are caught in a… Kobayashi Maru scenario of trade policy. The projected global GDP growth is slated to slow from 3.3% in 2024 to 2.9% this year and in 2026. This assumes of course that existing tariff rates remain in place despite ongoing legal challenges. It appears a course of action must be taken with great caution. "The global outlook is becoming increasingly challenging," they say.

Uncertainty: The Only Constant

The report highlights substantial increases in trade barriers tighter financial conditions weaker business and consumer confidence and heightened policy uncertainty as factors that will adversely affect growth prospects if they persist. Indeed it appears that the only constant is change or more accurately uncertainty. The U.S. Court of International Trade for instance struck down Trump's reciprocal country specific levies only to have them reinstated by an appeals court. The state of affairs is almost… as unpredictable as Commander Chekov's accent. This leads to illogical outcomes.

Economic Vulcan Nerve Pinch

OECD Chief Economist Alvaro Pereira aptly noted that trade and economic policy uncertainty have reached "unprecedented levels." He postulates logically that this has led to a decrease in consumption and investment which in turn leads to less growth fewer jobs and more inflationary pressures. It appears we are witnessing a… Vulcan nerve pinch on the global economy. A most illogical approach indeed.

Inflation: The Unwelcome Guest

Speaking of inflationary pressures the OECD has adjusted its inflation forecast stating that higher trade costs especially in countries raising tariffs will push up inflation. This effect will be partially offset by weaker commodity prices though. The impact of tariffs on inflation remains a topic of considerable debate as well as a source of consternation. I suppose this is not entirely unexpected; a truly elegant argument is as rare as a truly logical human. The inflation outlook for the U.S. is projected to be 3.2% in 2025 up from 2.8%. It could even approach 4% by the end of 2025. A most… disconcerting trajectory.

AI: A Technological Beacon of Hope?

Pereira also discussed the impact of technology such as AI on productivity. He suggests that the U.S. is poised to gain an advantage due to its higher exposure to AI. It appears that there is a possibility of a significant productivity revival provided that trade barriers are lowered and investment and consumption increase. If we are able to get trade agreements between countries and reduce uncertainty we may be on the cusp of something quite significant. I would say it is a future…worth pursuing.