The U.S. economy shrank in the first three months of 2025 as President Donald Trump imposed sweeping tariffs — the first time the country’s economy has declined in three years.
In the last three months of 2024, the U.S. economy increased by an annualized rate of 2.4 percent. However, in the wake of massive tariffs imposed by the Trump administration and other actions that have led to economic uncertainty, the country’s gross domestic product (GDP) decreased by an annual rate of 0.3 percent in the first three months of 2025, according to numbers from the U.S. Bureau of Economic Analysis.
Many economists predicted that, when Trump’s tariffs were enacted, imports would increase in order for businesses to avoid paying higher prices later on, resulting in a surplus of goods while consumer spending remained unchanged.
“We anticipate a marked slowdown in the U.S. economy during the first quarter, driven by increasing policy uncertainty surrounding trade, tariffs, and immigration,” S&P Global Ratings said in a note to their clients.
Still, the GDP decrease is a worrying sign for many who fret about the country’s economic future. Recent polling shows that 82 percent of Americans are nervous that the U.S. could soon enter a recession, with 91 percent concerned about inflation, an issue Trump had promised during his 2024 campaign to immediately address upon taking office.
Many economists define the start of a recession as two consecutive quarters of economic decline. If the U.S. economy continues to slope downward between now and June, that metric will be reached.
Wall Street responded negatively to news of the slight economic downturn, with market indexes opening hundreds of points lower than they had closed the day before. Trump immediately sought to shift the blame to his predecessor.
“This is [former President Joe] Biden’s Stock Market, not Trump’s. I didn’t take over until January 20th,” Trump said in a Truth Social post on Wednesday morning.
He further claimed that tariffs, which are partially to blame for the economic uncertainties that led to the economy shrinking, would “soon start kicking in,” causing companies “to move into the USA in record numbers” — a claim that economists have repeatedly disputed.
“This will take a while, has NOTHING TO DO WITH TARIFFS, only that [Biden] left us with bad numbers,” Trump wrote, again blaming the former president. “But when the boom begins, it will be like no other. BE PATIENT!!!”
In a cabinet meeting later on Wednesday, Trump, who is serving his second term as president, said that he should get “a pass on the first month” of economic data, as he and his administration are “sort of getting a little bit used to things.”
Trump’s words contradict his campaign promises, when he pledged to deliver economic improvements in his first days as president. Notably, Trump has repeatedly taken credit for improvements during the Biden administration, taking ownership of the economy when markets were doing better.
“THIS IS THE TRUMP STOCK MARKET BECAUSE MY POLLS AGAINST BIDEN ARE SO GOOD THAT INVESTORS ARE PROJECTING THAT I WILL WIN,” Trump wrote on Truth Social in January 2024, following gains on Wall Street.
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