U.S. Business Growth Slows to Three-Month Low as Tariffs Hike Costs and Demand Cools

American businesses hit the brakes hard in September—growth slumped to its weakest pace in three months. Tariffs slammed companies with rising costs while consumer demand chilled across sectors.

The Perfect Storm

Trade barriers created a double-whammy: supply chain expenses ballooned while buyers pulled back. The numbers don't lie—three consecutive months of declining momentum show structural pressure building.

Corporate America's reality check hits as Wall Street analysts still pitch 'soft landing' fantasies. Meanwhile, smart money's already rotating into assets that thrive during economic friction—hint: they're not trading at 30x earnings.

OECD warns Tariffs’ full impact on businesses still ahead

Separately on Tuesday, the OECD warned that the full effect of President Donald Trump’s tariff increases “has yet to be fully felt” across the U.S. economy. The organization projected global growth at 2.9% and U.S. growth at 1.5% in 2026, down sharply from 3.3% and 2.8% in 2024. The Paris-based body said tariffs, immigration changes, and inflation are the main forces weighing on prospects.

The fallout from trade measures is especially prominent, the OECD said. “The impacts of higher tariff rates are yet to be fully felt in the US economy,” the report said.

The organization noted that many tariff changes are phased in over time and that some firms have initially absorbed higher costs. Even so, signs of strain are emerging, citing the Federal Reserve’s decision last week to cut interest rates and Chair Jerome Powell’s observation that younger workers in particular are finding it harder to secure jobs. It also referenced a warning this week from former TRUMP economic adviser Gary Cohn.

Economic shock from trade barriers could arrive sooner

The economic shock from higher trade barriers could arrive as soon as this year, the OECD said. “Growth is expected to soften noticeably in the second half of this year, as front-loading activity unwinds and higher effective tariff rates on imports to the United States and China dampen investment and trade growth.”

For the current year, however, the OECD lifted its global growth forecast to 3.2%, from 2.9% in June, and raised its U.S. projection to 1.8% from 1.6%. Even with those upgrades, the group did not improve its outlook for next year and said the picture remains weak.

The upward revisions reflect companies’ efforts earlier this year to front-load trade ahead of tariff increases, the report said. Large investments in artificial-intelligence companies have also supported the near-term outlook. “Reductions in trade restrictions or faster development and adoption of artificial intelligence technologies could strengthen growth prospects,” the OECD wrote.

Taken together, the PMI snapshot shows firms wrestling with rising costs and softer demand while holding the line on prices. The OECD sees trade policy as a drag even as near-term growth gets a lift from front-loaded orders and AI.

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