U.S. Economy Contracts in Q1 2025 as Trump Trade Wars Disrupt Growth

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2025-05-29 17:14:02

The U.S. economy shrank at an annualized rate of 0.2% in Q1 2025, marking a sharp reversal from Q4 2024’s 2.4% expansion. The downturn reflects fallout from TRUMP administration trade policies, with import surges and reduced government spending dragging on GDP.

Businesses raced to stockpile foreign goods ahead of anticipated tariffs, driving imports up 42.6% - the fastest pace since Q3 2020. This inventory buildup artificially inflated Q1 trade figures while setting the stage for future demand destruction.

Despite the headline contraction, underlying consumer strength persists. Real final sales to private domestic purchasers grew 2.5%, suggesting households continue spending through economic crosscurrents.

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