Donald Trump’s tariff wars deal with a blow! The US economy shrinks 0.5%; Worse than estimated
The Commerce Department on Thursday announced that the US economy decreased by 0.5% on an annual basis in the first quarter of 2025, as President Donald Trump’s trade war inspired a crowd of imports, disrupting businesses.Estimates of a pre -estimated decline of 0.2% reflects the economic decline from the unexpected sharp downgrade, Trump’s trade policies, which saw American firms scrambled to import goods before tariffs were effective. AP reported that an increase in imports 37.9%, at the fastest speed after 2020, draws GDP below 4.7 percent points.This contraction marks the decline in the first quarter in the US economy in three years, reversing an increase of 2.4% recorded in the last three months of 2024.Consumer expenses also took a significant hit, slowing down only 0.5% increase, falling from 4% recorded in the previous quarter and below earlier government estimates. A major measure of the economy’s underlying strength increased at an annual rate of 1.9% between January and March. It is a noticeable recession at a speed of 2.9% seen in the last quarter of 2024. This category includes more unstable components such as exports, inventions and consumer expenses and private investment except government expenditure. The expenses of the federal government also slipped, which fell at 4.6% annual rate, the biggest decline since 2022.How did imports draw US GDP?The GDP or GDP includes only those who are produced domestic, not imported from foreign land. Therefore, the imports reflected in the GDP report as consumer expenses or commercial investment should be reduced to avoid the figures that inflated.However, economists believe that recession may prove to be short -lived. The import-driven deformity seen in the first quarter is not expected to be repeated in the period of April to June. According to a factset survey, many forecasts estimate a reversal, the second quarter is estimated to reach 3%with GDP growth.The first official estimate of the second quarter GDP is scheduled to be held on July 30.
