US economy grew at half the expected rate in the final quarter of 2025 due to tariffs and government shutdown

"Real GDP was revised down 0.7 percentage point from the advance estimate, reflecting downward revisions to exports, consumer spending, government spending, and investment. Imports decreased less than previously estimated, the BEA noted. The statistical office's own analysis acknowledges that the tariffs slowed down foreign trade."

"Last year, the Trump administration disrupted global trade rules by indiscriminately imposing tariffs on all his allies based on arbitrary criteria. Furthermore, the last quarter of the year was impacted by the longest federal government shutdown in history. For 43 days, hundreds of government agencies were left without funding, and hundreds of thousands of public employees went unpaid."

"Despite the challenges, U.S. economic growth was supported by stronger consumer spending and increased investment, driven in part by the large amounts of funding in artificial intelligence."

U.S. economic growth decelerated significantly in the fourth quarter of 2025, with GDP expanding only 0.7%, half the initial estimate. The annual growth rate was revised down to 2.1%, compared to 2.8% in 2024 under the Biden administration. Real GDP faced downward revisions across exports, consumer spending, government spending, and investment. The slowdown resulted from multiple factors: tariffs imposed by the Trump administration disrupted global trade, the longest federal government shutdown in history lasted 43 days and left hundreds of thousands of public employees unpaid, and consumer spending decelerated. However, investment accelerated, particularly in artificial intelligence, and stronger consumer spending partially offset the declines in other sectors.

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