U.S. economy contracts more severely than anticipated during first quarter
Chat Share Share Via Email Print Copy Link New reports indicate that the U.S. economy faced a steeper decline in the first quarter of the year than previously estimated. The Gross Domestic Product (GDP) dropped at an annualized rate of 0.5 percent in the first quarter, as per the U.S. Commerce Department's revision on Thursday.
Initially, the government estimated a minor 0.2 percent decline at the end of May. The revision was prompted by weaker consumer spending and lower exports between January and March, along with reduced imports into the U.S. than previously estimated.
President Donald Trump has pinned the economic downturn on his successor, Joe Biden. However, experts suggest that early signs point towards a braking effect from Trump's aggressive trade policies. In about two weeks, Trump's deadline for a deal with the EU and several countries embroiled in the trade dispute will expire.
The ensuing trade tensions have shown significant negative effects on the U.S. economy:1. Trump's tariffs, affecting approximately 71% of U.S. goods imports, have generated substantial federal tax revenue (equivalent to 0.51% of GDP) but have also inflicted broader economic damage, such as slowed GDP growth, higher consumer prices, reduced U.S. export growth, and increased inflation, market volatility, job losses, and lower consumer and business confidence.2. The tariffs, especially the ones impacting about $330 billion in U.S. exports, have led to a significant slowdown in export growth (from the average annual growth of 5% to only 0.7% in 2025).3. Legal challenges to the tariffs have added uncertainty to the situation, with temporary suspensions of some emergency tariffs and possible appeal proceedings by the Trump administration.4. Internationally, these trade policies have strained U.S. relationships with significant trading partners, potentially harming trust in the U.S. as a reliable negotiation partner and complicating future trade engagements.
Source: ntv.de, AFP
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[5] "US-China trade war: Trump slaps new tariff on $200 billion of Chinese goods"
The revised Q1 GDP report reveals that weakened consumer spending, lower exports, and reduced imports have contributed to the steep decline in the U.S. economy. The ongoing trade tensions, resulting from President Trump's aggressive trade policies, have negatively affected community confidence, employment opportunities, business growth, and finance stability.
