Tariff Uncertainty and Its Impact on Your Business Growth: What Investors and Entrepreneurs in Oman Should Know
President Donald Trump’s implementation of punitive tariff policies is contributing to slower economic growth, increased uncertainty, and a cooling of investment and trade among the United States and major global economies, according to new projections released Tuesday by the Organization for Economic Cooperation and Development (OECD).
The full effects of the elevated U.S. tariffs are still unfolding, but early impacts are evident. American consumers are beginning to reduce spending, while labor markets in affected countries have seen companies cut jobs or slow hiring due to the tariffs, the Paris-based intergovernmental organization noted in its latest economic outlook.
Global economic growth is forecast to reach 3.2% this year, slightly higher than the 3.3% expected in 2024. This marginal increase is attributed to trading partners accelerating manufacturing before tariffs took effect at the U.S. border.
Trump’s tariffs, including duties up to 50% on foreign steel and aluminum, have targeted former close partners such as the European Union, Canada, and India, as well as longstanding rivals like China. These measures have raised the overall effective U.S. tariff rate to an estimated 19.5%, the highest level since 1933, resulting in slowed economic and trade activity.
As the tariffs continue to impact supply chains, labor markets, and consumer behavior, the OECD projects global growth will decelerate further to 2.9% by 2026.
“The global economy was more resilient than anticipated in the first half of 2025, but downside risks loom large as higher barriers to trade and geopolitical and policy uncertainty continue to weigh on activity in many economies,” the report stated.
The U.S. economy is expected to experience more pronounced effects starting next year. Although investment in artificial intelligence has supported growth and firms have temporarily absorbed higher import costs through inventories and profit margins, private consumption growth is already weakening. The report forecasts U.S. economic growth will slow to 1.8% this year, down from 2.8% in 2024, and further dip to 1.5% in 2026, compounded by higher tariffs and decreased net immigration.
Europe’s growth outlook is even more subdued, with expected rates of 1.2% for 2025 and 1% for 2026, reflecting heightened trade tensions and geopolitical uncertainties. China, heavily impacted by the trade war and tariffs, is predicted to see growth decline to 4.9% this year, down from 5% last year, and fall further to 4.4% in 2026.
Inflation is projected to decrease across most major economies due to slower growth and weaker employment; however, central banks are advised to remain vigilant. The report also underscores the need for governments facing rising debt and deficits to take stronger fiscal measures.
Financial markets are showing increased signs of uncertainty, with growing concerns about risks. Ten-year U.S. Treasury bonds, a traditional stability benchmark, now carry historically high premiums. In France, political instability and elevated debt are reflected in widening sovereign bond spreads relative to Germany. Meanwhile, gold prices—a safe-haven asset—have surged nearly 40% since the start of the year, recently reaching a record high above $3,770 an ounce.
“To strengthen economic growth prospects, a key priority is to ensure a lasting resolution to trade tensions,” said OECD Secretary-General Mathias Cormann. “We recommend that governments engage productively with one another to make international trading arrangements fairer and function better.”
This report first appeared in The New York Times.
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The ongoing U.S. tariff-driven trade disruptions signal increased global economic uncertainty and slower growth, which could constrain Omani export opportunities and raise import costs. For businesses in Oman, this underscores the need to diversify supply chains and explore alternative markets to mitigate risks. Smart investors should focus on sectors less exposed to international trade volatility and consider strategic investments in local industries and technologies to build resilience against global shocks.
