The world markets have been on a rollercoaster since Donald Trump took office on January 20. Countries and corporations have been reeling from the tariff turmoil since then. But the very idea that Trump touted as his primary objective, 'To make America rich again,' is under scrutiny from economists, politicians, and the latest economic data. The US economy contracted by 0.3 per cent in the first quarter of 2025 — the first decline in three years. Businesses rush to import goods ahead of sweeping new tariffs, which Trump believes have nothing to do with the GDP decline.

Advertisment

US economy shrinks as imports soar

Imports surged 41.3 per cent, the biggest jump since the pandemic-era third quarter of 2020. This front-loading, driven by uncertainty, overwhelmed modest export gains and a rebound in inventories. The data comes after the goods trade deficit hit an all-time high in March, forcing economists to sharply revise their growth estimates.

Consumer spending, which accounts for over two-thirds of the economy, slowed in the previous quarter. Households have pulled purchases forward and are saving amid rising uncertainty. 

Advertisment

Meanwhile, core inflation also accelerated — the core personal consumption expenditures index rose, keeping pressure on the Federal Reserve as it weighs further rate cuts later this year. Final sales to private domestic purchasers grew a solid 3.0 per cent, but economists caution that this measure has been distorted by tariff effects. The contraction in GDP has triggered sharp political and market reactions. All major Wall Street indices fell, and treasury yields climbed. President Trump blamed the slowdown on Biden-era policies but defended his trade approach, calling the surge in investment a sign of economic strength.

Donald Trump, US President, said, "Core GDP (gross domestic product), and this is, you know, you probably saw some numbers today. And I have to start off by saying, that's [Joe] Biden. That's not Trump, because we came in on January. These are quarterly numbers. And we came in, and I was very against everything that Biden was doing in terms of the economy, destroying our country in so many ways, not only at the border."

Economists warn that while the contraction may not mark the start of a recession, the combination of trade disruption and policy uncertainty has significantly raised the risk.