US Economy Shrinks 0.5% Due to Trump's Tariff Wars

The US economy shrank by 0.5% on an annual basis in the first quarter of 2025 due to President Donald Trump's trade war causing a surge in imports. This disrupted businesses and led to a sharp downgrade from the initial estimate of a 0.2% decline. The increase in imports, up by 37.9%, was the fastest since 2020 and dragged down the GDP by almost 4.7 percentage points. This contraction marked the first quarterly decline in three years, with consumer spending also taking a hit, growing at just 0.5% compared to the previous quarter's 4%.

The underlying strength of the economy grew at a rate of 1.9% between January and March, a slowdown from the previous quarter. Federal government spending fell at a 4.6% annual rate, the steepest decline since 2022. Economists believe this slump may be short-lived, with a rebound expected in the April-to-June period and second-quarter GDP growth projected to reach 3%.

The first official estimate of second-quarter GDP is due on 30 July.

According to the source: Times of India.