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The U.S. economy shrank in the first quarter of 2025, marking its worst performance since 2022, as President Donald Trump’s sweeping and abrupt policy changes, particularly on trade, sent shockwaves through businesses and consumers, CNN reported on Wednesday. According to data released by the Commerce Department, the country’s GDP declined at an annualised rate of -0.3%, a sharp reversal from the 2.4% growth recorded in the previous quarter. The figure also fell far short of the 0.8% growth that economists had projected, the report said.
The unexpected contraction rattled investors, with U.S. stocks falling soon after the GDP numbers were made public.
Analysts point to President Trump’s recent string of tariff escalations — especially in the U.S.-China trade dispute — as the primary source of economic disruption. Trump’s monumental bid to reshape global trade is likely to send inflation climbing in the United States and even trigger a recession, the CNN report stated, citing economists.
Despite the data showing a weakening economy in the first full quarter of his second term, President Trump wrote in a social media post, “Our country will boom, but we have to get rid of the Biden ‘overhang,’”. “This will take a while and has NOTHING TO DO WITH TARIFFS, only that he left us with bad numbers, but when the boom begins, it will be like no other. BE PATIENT!!!”
US GDP shrinks by 0.3% amid trade turmoil; Trump blames ‘Biden overhang’
According to the report, the GDP decline was largely attributed to a widening trade deficit, driven by a surge in imports. As Americans rushed to purchase goods before Trump’s new tariffs took effect, imports spiked from -1.9% to 41.3%—the highest quarterly jump in decades. Meanwhile, exports grew modestly at 1.8%, widening the trade imbalance, the report further said.
Government spending also saw a pullback, contributing further to the economic slump. Meanwhile, Trump’s top trade adviser, Peter Navarro, said in an interview with CNBC, “The markets need to look beneath the surface,” calling it “the best negative print I have ever seen in my life.”
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