Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

US economy shrinks for first time since 2022 as Trump tariffs rattle markets

by May 1, 2025
May 1, 2025
US economy shrinks for first time since 2022 as Trump tariffs rattle markets

The US economy shrank in the first quarter of 2025, marking its first contraction since early 2022, as a surge in imports ahead of President Trump’s sweeping new tariffs dragged down output, official figures show.

Gross domestic product (GDP) fell by 0.3% on an annualised basis between January and March, according to the US Bureau of Economic Analysis (BEA), ending a period of strong post-pandemic growth. The figure was worse than the 0.2% drop expected by analysts and a sharp reversal from 2.4% growth in the previous quarter.

The contraction was largely caused by a 41.3% spike in imports, as businesses rushed to stockpile foreign goods before tariffs took full effect. Since imports subtract from GDP, this surge had a negative impact on the growth figures. America’s goods trade deficit also hit a record high in March.

Wall Street reacted sharply to the news, with early losses across major indices. However, markets stabilised by close: the Dow Jones rose 0.4%, the S&P 500 edged up 0.2%, and the Nasdaq recovered from a steep drop to end just 0.1% lower.

Economists believe the downturn may be temporary. Paul Ashworth of Capital Economics noted that the import surge is already reversing, which “should boost second-quarter GDP.” ING’s James Knightley said businesses were “desperately trying to bring in as many goods as possible ahead of tariffs.”

The downturn coincides with the rollout of Trump’s “liberation day” tariff plan, announced on April 2. The plan imposes a blanket 10% tariff on all imports, a 145% charge on Chinese goods, and additional sector-specific levies. Trump later delayed implementation of most tariffs by 90 days, but core charges remain in place.

Despite the contraction, Trump blamed his predecessor in a Truth Social post:

“This is Biden’s Stock Market, not Trump’s. Tariffs have NOTHING TO DO WITH IT. Our Country will boom… BE PATIENT!!!”

Adding to economic headwinds was a drop in government spending, tied in part to a sharp reduction in public sector staff overseen by Elon Musk, head of the Department of Government Efficiency (Doge).

Major investment banks including Goldman Sachs, JP Morgan, and Morgan Stanley have since downgraded their US growth forecasts. JP Morgan now sees a 60% chance of recession in the coming months.

Inflation also showed signs of re-accelerating. The core personal consumption expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge, rose to 3.5%, up from 2.6% and higher than expected.

Meanwhile, the eurozone economy delivered a rare bright spot, growing by 0.4% in Q1, double the previous quarter’s pace. Germany and France narrowly avoided recession, buoyed by interest rate cuts by the ECB and a new €500 billion investment plan announced by Germany’s incoming chancellor Friedrich Merz.

However, analysts warned that Trump’s tariffs — which currently subject the EU to a 10% blanket rate and could rise to 20% — may weigh on future European growth. Christophe Boucher of ABN Amro called the latest eurozone GDP data “a good surprise,” but cautioned it “does not take into account the ‘liberation day’ shock.”

As global markets adjust to Trump’s protectionist policies, economists are watching closely for signs of deeper disruption — and whether the US contraction marks a blip or the beginning of a broader slowdown.

Read more:
US economy shrinks for first time since 2022 as Trump tariffs rattle markets

0
FacebookTwitterGoogle +Pinterest
previous post
Vance breaks key tie after Senate fails to reject Trump’s national emergency on tariffs
next post
Greene King boss calls for business rates relief as budget adds £50 million in annual costs

You may also like

Unleash Your Influence: Effective Tactics to Expand Your...

April 24, 2024

Bank of England raises interest rates to 3.5%

December 15, 2022

UK tech entrepreneur warns of impact of fake...

May 19, 2023

Krepling raise $1m to elevate its position as...

November 3, 2022

Virgin Atlantic tempts British Airways Executive Club Members...

February 11, 2024

Inheritance Tax Receipts reach £5.3 billion in the...

January 24, 2023

Chancellor Downplays Tax Cut Expectations, with £800m Tech...

March 4, 2024

Lord Sugar secures three-year deal to continue The...

March 20, 2025

Inflation fear as food prices hit record highs

January 4, 2023

Tories Mull Stamp Duty Cut Ahead of General...

April 20, 2024

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • PPF Dubai: Why More Drivers Are Choosing Paint Protection Film

      May 21, 2025
    • Speaker Johnson reaches tentative deal with blue state Republicans to boost cap on SALT deduction

      May 21, 2025
    • AI cash boom masks rise of ‘zombiecorns’ as funding gaps widen in startup ecosystem

      May 21, 2025
    • Sention Technologies secures £3.7m seed round to revolutionise battery diagnostics

      May 21, 2025
    • Trump’s proposed tax changes could sharply raise costs for globally mobile US employees and businesses

      May 21, 2025
    • EU proposes €2 handling fee on online parcels in customs overhaul targeting global e-commerce

      May 21, 2025

    Categories

    • Business (8,017)
    • Investing (1,974)
    • Politics (15,324)
    • Stocks (3,094)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved