US economy shrinks in first quarter of Trump's second term
US economy shrinks in first quarter of Trump's second term | Breaking News & Latest Australia Updates
US economy shrinks in first quarter of Trump's second term — Topic:Economic Trends and Indicators Economists say Donald Trump's sweeping tariffs have weighed down on economic growth.(Reuters: Carlos Barria) US P...
Topic:Economic Trends and Indicators
Economists say Donald Trump's sweeping tariffs have weighed down on economic growth.(Reuters: Carlos Barria)
US President Donald Trump has blamed his predecessor for an unexpected 0.3 per cent decline in US gross domestic product in the first three months of 2025.
Economic growth was weighed down by companies rushing to import goods into the US ahead of tariffs, which can decrease GDP.
Economists say they predict the economy will see more declines later this year.
Donald Trump asked Americans to be "be patient" after the US economy unexpectedly shrank in the first quarter of the year, amid widespread concern over the president's tariffs agenda.
Gross domestic product (GDP) decreased at an annualised rate of 0.3 per cent between January and March, according to a report released by the Commerce Department's Bureau of Economic Analysis on Wednesday.
That was worse than the 0.3 per cent growth economists had been forecasting, and came amid deep uncertainty over the impact of the Trump administration's broad tariffs.
The latest data marks the American economy's worst performance in three years, as well as a dramatic reversal on the 2.4 per cent annualised growth recorded in the last three months of 2024.
Taking to Truth Social after figures were released, Mr Trump sought to blame his predecessor, Joe Biden, as he told voters to "BE PATIENT!!"
"This is Biden's Stock Market, not Trump's. I didn't take over until January 20th," he wrote.
A flood of imports into the US has helped dampen economic growth.(AP: Ng Han Guan)
Imports between January and March grew at 41 per cent, the fastest pace since 2020, and shaved 5 per cent off first-quarter growth.
GDP, which measures domestic growth, are negatively impacted by an increase in tariffs.
The declines triggered a sell-off on Wall Street, with the S&P 500 down nearly 2 per cent in the first hour of trade.
The figures are likely to add to anxieties over the state of the world's largest economy. Prior to Wednesday's figures, consumer confidence was already near five-year lows and business sentiment has tanked.
The economic figures caused a sharp sell-off on the New York Stock Exchange.(AP: Seth Wenig)
Airlines have pulled their 2025 financial forecasts, citing uncertainty over spending on non-essential travel because of tariffs, which economists have warned will raise costs for companies and households.
Imports into the US from most countries around the world are being hit with a 10 per cent tariff.
A 145 per cent tariff on Chinese goods remains in place.
The president insisted, however, that his wide-ranging import levies will return manufacturing to American shores.
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"Tariffs will soon start kicking in, and companies are starting to move into the USA in record numbers. Our Country will boom, but we have to get rid of the Biden 'Overhang'."
But outspoken critics of Mr Trump were quick to pin blame on the president, who this week marked 100 days in office.
"One hundred days into his presidency, Donald Trump’s red-light, green-light tariffs are shrinking our economy, with businesses stockpiling imports in anticipation of tariff doomsday," Democratic senator Elizabeth Warren said.
It came as companies rushed to import foreign-made goods into the US before Mr Trump imposed tariffs.
High Frequency Economics chief economist Carl Weinberg said he believed the economy would "get worse in the second half of this year".
"Corrosive uncertainty and higher taxes — tariffs are a tax on imports — will drag GDP growth back into the red by the end of this year.''
Reuters/AP
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