US economy shrinks 0.3% in first quarter as Donald Trump's trade wars disrupt business
The US economy shrank 0.3% from January through March, the first drop in three years.
It was slowed by a surge in imports as companies in the United States tried to bring in foreign goods before President Donald Trump imposed massive tariffs.
The January-March expansion was the slowest in almost three years and was down from 2.4% in the last three months of 2024.
Imports shaved five percentage points off first-quarter growth.
Consumer spending also slowed sharply.
Federal government spending plunged 5.1%.
But business investment rose at a 21.9% clip as companies poured money into equipment.
And a category within the GDP data that measures the economy’s underlying strength rose at a healthy 3% annual rate from January through March, up from 2.9% in the fourth quarter of 2024.
This category includes consumer spending and private investment but excludes volatile items such as exports, inventories and government spending.
Mr Trump inherited a solid economy that had grown steadily despite high interest rates imposed by the Federal Reserve to fight inflation.
His erratic trade policies – including 145% tariffs on China – have paralysed businesses and threatened to raise prices and hurt consumers.
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