US Economy Shrinks 0.3% in Q1 2025 Amid Tariff Uncertainty

The U.S. economy contracted by 0.3% in the first quarter of 2025, marking its first decline in over two years and ending a streak of steady growth. This downturn was primarily driven by a surge in imports, as companies rushed to buy foreign goods ahead of President Donald Trump’s new tariffs, which significantly dragged down GDP due to the way the figure is calculated. Net exports posed a record drag on growth, while government spending also declined. Consumer spending, though still growing at 1.8%, showed signs of slowing, and business investment in equipment rose sharply. Some analysts suggest that underlying domestic demand remains relatively healthy, as final sales to private domestic purchasers grew at a 3% annualized rate. The contraction has raised concerns that continued tariff-related uncertainty could further strain consumers and raise costs in the coming months.