The US economy contracted by 0.3% in the first quarter of 2025, following a growth of 2.4% in late 2024. This downturn was primarily triggered by a significant surge in imports, which increased by 41.3% annually, as businesses stockpiled goods ahead of impending tariffs from President Trump's aggressive trade policies. The unprecedented trade deficit impacted GDP negatively, despite stable domestic demand. Financial markets showed resilience with positive recoveries post-initial declines, although analysts remain cautious about the future economic landscape amid tariffs.
"Importers desperately tried to bring in as many goods as possible ahead of tariffs," said James Knightley, chief international economist at ING.
"This surge now appears to be reversing, which could give a boost to second-quarter GDP," added Paul Ashworth of Capital Economics.
Trump denied that tariffs had caused the contraction: "This is Biden's Stock Market, not Trump's... This will take a while, has NOTHING TO DO WITH TARIFFS...".
Despite the contraction, Wall Street showed resilience. After opening sharply lower, the Dow Jones closed up 141 points, with more muted gains for the S&P 500...
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