The US economy shrank in the first three months of the year as government spending fell and imports surged due to firms racing to get goods into the country ahead of tariffs.
The economy contracted at an annual rate of 0.3%, a sharp downturn after growth of 2.4% in the previous quarter, the Commerce Department said.
The figures marked the first quarterly decline in three years, and came as the introduction of import taxes by President Donald Trump has scrambled global trade and created major uncertainty. But analysts said it would take more time to understand the impact of the tariff changes.
While imports count against growth in calculations of gross domestic product (GDP), the surge is expected to be reversed in the months ahead. Those swings do not necessarily indicate an economy performing poorly. The report also showed consumer spending – the primary driver of the US economy – expanded 1.8%, though at a slower pace than in 2024.
At a television appearance with cabinet members, Trump blamed his predecessor, Joe Biden, for the economic weakening, maintaining that his policies would drive investment in the US and an economic boom.
“This is Biden,” he said, while appearing to dismiss bubbling fears of price increases, supply shocks and shortages of items such as toys, as trade between the US and China falls sharply.
“Well, maybe the children will have to have two dolls instead of 30 dolls, you know? And maybe the two dolls will cost a couple of bucks more than they would normally.”
In a statement, the White House said the GDP figures were a “backward-looking indicator”. “The underlying numbers tell the real story of the strong momentum President Trump is delivering,” press secretary Karoline Leavitt said.
Since re-entering the White House in January, Trump has taken the business world by storm, announcing a series of new trade tariffs that he says will raise money for the government and help boost US manufacturing.
While he has watered down some of the policies in face of domestic outcry, analysts say the measures still leave the US with the highest overall effective average tariff rate in over 100 years. This report tracked activity through the end of March, a period before Trump announced his most far-reaching “Liberation Day” tariffs on China and other countries around the world, which sparked a dramatic sell-off in the stock market and turmoil in currency and debt markets.
– BBC
