The U.S. economy unexpectedly shrank in the first quarter of 2025, as businesses rushed to import goods ahead of a wave of new tariffs rolled out by President Donald Trump, according to government data released Wednesday.
The Commerce Department reported a 0.3% annualized decline in gross domestic product (GDP) for the January-March period—marking a sharp reversal from the 2.4% growth seen in the final quarter of 2024. The figure also fell well below market expectations of 0.4% growth.
In an AFP report, Officials attributed the contraction to a spike in imports, a slowdown in consumer spending, and reduced government expenditures. Under GDP calculations, rising imports subtract from overall economic output.
This downturn comes just over 100 days into Trump’s second term, during which his administration has aggressively pushed forward protectionist trade policies. In March, the White House announced sweeping tariffs on a range of foreign goods, including a staggering 145% duty on Chinese imports and new levies on steel, aluminum, and car parts not manufactured in the U.S.
The rush to bring in goods ahead of those tariffs helped trigger the import surge—and with it, the unexpected GDP drop. “This spike in imports, that’s coming directly from people trying to get ahead of tariffs,” said George Washington University economist Tara Sinclair. “And that is in direct response to the policies of this president.”
The volatility has rattled financial markets, prompting the administration to temporarily delay some of the harsher measures, offering a 90-day window for trade negotiations. However, the core tariff framework remains in place for most countries, maintaining a baseline rate of 10%.
While the economy grew by 2.8% in 2024, forecasters have since revised their 2025 projections downward. Many analysts say the impact of these aggressive trade actions could linger, especially if global retaliation continues.
