The US economy saw a contraction of 0.5% in the first quarter of 2025, worse than an earlier estimate of 0.2%. This decline is attributed to revised figures indicating lower consumer spending and exports; notably, an import surge prior to President Trump's tariffs led to businesses stockpiling goods, notably from China. This surge contributed nearly 4.7 percentage points to the GDP decline. Economists predict that the GDP will recover to a growth of 3% in Q2 as the import surge is unlikely to recur. The ongoing trade negotiations and tariff deadlines add uncertainty to the economic outlook.
According to the Commerce Department, real gross domestic product fell by 0.5% in the first quarter of 2025, compared to the previously reported dip of 0.2%.
The decline primarily reflects downward revisions to consumer spending and exports, which were partly affected by a downward revision to imports, the Department added.
The import influx is not likely to be repeated in the second quarter, and therefore it shouldn't weigh on GDP as the second-quarter growth is expected to bounce back to 3%, economists say.
Trump's tariffs have pushed China and the European Union into a race to find new trade partners, with EU state saying they aim to reach out to countries in the Indo-Pacific and the Global South.
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