The US economy contracted by 0.3% in the first quarter of 2025 for the first time since early 2022, attributed to a 41.3% increase in imports before President Trump's new tariffs were implemented. This downturn ended a period of robust post-pandemic growth, disappointing analysts who expected only a 0.2% drop. The surge in imports led to a record goods trade deficit, impacting GDP. Some economists expect this contraction to be temporary, predicting a rebound in GDP as import volumes normalize. Trump's tariff plans continue to create uncertainty in the market, leading to initial losses on Wall Street, though stocks later stabilized.
The US economy shrank in the first quarter of 2025, marking its first contraction since early 2022, as a surge in imports ahead of President Trump's sweeping new tariffs dragged down output.
Economists believe the downturn may be temporary. Paul Ashworth noted that the import surge is already reversing, which should boost second-quarter GDP.
Trump blamed his predecessor in a Truth Social post: 'This is Biden's Stock Market, not Trump's. Tariffs have NOTHING TO DO WITH IT.'
Despite the contraction, Wall Street reacted sharply with early losses, but markets stabilized by close, with slight gains in major indices.
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