UK and global economic growth forecasts have been downgraded over concerns that US President Donald Trump’s trade wars could drive up inflation.

According to the Organisation for Economic Co-operation and Development (OECD), growth prospects for this year and 2026 are likely to be dented as Trump pushes ahead with plans to impose 25% tariffs on almost all merchandise imports from Canada and Mexico from April, The Guardian reported.

The OECD reduced its prediction for UK growth by 0.3 percentage points for 2025 to 1.4%, and by 0.1 percentage points for 2026 to 1.2%.

The intergovernmental organization with 38 member countries also cut its global growth forecasts by 0.2 percentage points for 2025 to 3.3%.

It said that rising geopolitical uncertainty and the effects of higher trade barriers is undermining the progress made to boost economic growth and limit inflation.

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In its interim outlook report, the OECD said: “Significant risks remain. Further fragmentation of the global economy is a key concern. Higher and broader increases in trade barriers would hit growth around the world and add to inflation.

“Governments need to find ways of addressing their concerns together within the global trading system to avoid a significant ratcheting-up of retaliatory trade barriers between countries. A broad-based further increase in trade restrictions would have significant negative impacts on living standards.”

The OECD held its forecast for UK inflation at 2.7% this year and 2.3% in 2026.

Last week, global wine brands such as Pernod Ricard, Rémy Cointreau and Moët & Chandon-owner LVMH came under pressure after Trump announced he could impose 200% tariffs on alcohol, including wine and champagne.

The potential move would come as a retaliation against the EU’s introduction of a 50% levy on American bourbon whiskey, which Trump previously described as “nasty”.