The United States’ economic performance in the first quarter is expected to show a significant slowdown — and possibly even a contraction — in a development that could prove politically damaging for President Donald Trump just 100 days into his return to office.
The upcoming GDP figures, set to be released on Wednesday, are anticipated to reveal a sharp decline from the previous quarter’s growth. According to Moody’s Analytics economist Matt Colyar, the drop-off will be “pretty dramatic” compared to the final quarter of 2024.
Much of the economic turbulence is being attributed to President Trump’s aggressive trade policies, particularly the new wave of tariffs announced in March and implemented in April. These measures, aimed at reshaping trade ties, triggered financial market volatility and rattled investors.
“Typically, we don’t see such sweeping policy changes so early in a presidential term,” said Tara Sinclair, an economics professor at George Washington University. “But this administration is different — these changes are clearly having a direct negative impact on the economy.”
In response to growing alarm, the Trump administration introduced a 90-day delay on higher tariffs for many countries, though a 10% base rate remained in place for most. Additional levies were imposed on specific sectors including steel, aluminum, automobiles, and auto parts. The most dramatic move was a 145% tariff package targeting Chinese imports, prompting immediate retaliatory tariffs from Beijing.
Economists Cut Growth Forecasts
The US economy expanded by 2.8% in 2024, but analysts had predicted a slowdown to around 2% in 2025. Since the latest round of tariffs was unveiled, however, many major financial institutions — including Goldman Sachs, JPMorgan, and Morgan Stanley — have revised their outlooks downward. Some now foresee negative growth for the first quarter.
Even without an outright contraction, any steep slowdown will still be notable. Moody’s Colyar expects only 0.5% annualized growth for the first quarter, while Briefing.com places the consensus forecast even lower, at 0.4%. That’s a sharp drop from the 2.4% growth recorded in the previous quarter.
Much of this slowdown, analysts argue, is due to a surge in imports, as consumers and companies rushed to buy goods ahead of the impending tariffs.
“That spike in imports is a direct reaction to Trump’s trade policies,” Sinclair explained. “People and businesses were clearly trying to get ahead of the tariff deadlines.”
A Mixed Economic Picture
While the tariffs are weighing on GDP, some other indicators tell a more complex story. Belinda Roman, an economics professor at St. Mary’s University in Texas, noted that employment figures have been stronger than expected — a sign that the full effects of trade policy may not be reflected in Q1 data alone.
“There might be a small contraction, but it’s also clear that something else is happening, given the strength in the labor market,” Roman said. “The more visible economic damage may not show until the second or third quarter.”
