Trade Wars Trigger First U.S. Economic Decline in Three Years
The U.S. economy experienced a 0.2% decline in the first quarter of 2025, marking the first contraction in three years. This drop was primarily due to increased imports ahead of impending tariffs from President Trump's trade wars. A significant rise in imports during this period impacted GDP negatively.
- Country:
- United States
The American economy saw its first decline in three years, contracting by 0.2% from January through March 2025. The Commerce Department's report on Thursday highlights the impact of President Donald Trump's trade wars, which have led to significant business disruptions.
The downturn was largely due to a surge in imports. U.S. companies rushed to acquire foreign goods before high import taxes took effect, affecting the GDP substantially, reversing a 2.4% growth from the previous quarter.
While consumer spending waned, imports grew at a remarkable 42.6% rate, the highest since 2020, reducing GDP growth by over five percentage points. Experts suggest that this import increase was a one-time occurrence and won't affect the subsequent quarter's GDP results.
(With inputs from agencies.)
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