Donald Trump's tariff wars deal a blow! US economy shrinks 0.5%; worse than estimates
The US economy shrank by 0.5% on an annual basis in the first quarter of 2025, as President Donald Trump's trade war prompted a rush of imports, disrupting businesses, the commerce department announced on Thursday.
This unexpected sharp downgrade from an earlier estimate of a 0.2% decline, reflects the economic fallout from Trump's trade policies, which saw American firms scrambling to import goods before tariffs could take effect.
The surge in imports, up by a staggering 37.9%, the fastest pace since 2020, dragged down the GDP by almost 4.7 percentage points, AP reported.
This contraction marks the first quarterly decline in the US economy in three years, reversing the 2.4% growth recorded in the final three months of 2024.
Consumer spending also took a significant hit, slowing to just 0.5% growth, a steep fall from the 4% recorded in the previous quarter and well below earlier government estimates.
A key measure of the economy's underlying strength, grew at an annual rate of 1.9% between January and March. That's a noticeable slowdown from the 2.9% pace seen in the final quarter of 2024. The category includes consumer spending and private investment while excluding more volatile components such as exports, inventories and government spending.
by Taboola
by Taboola
Sponsored Links
Sponsored Links
Promoted Links
Promoted Links
You May Like
5 Books Warren Buffett Wants You to Read In 2025
Blinkist: Warren Buffett's Reading List
Undo
Federal government spending also slumped, falling at a 4.6% annual rate, the steepest decline since 2022.
How did imports drag down US GDP ?
GDP or the Gross Domestic Product includes only what is produced domestically, not what is imported from foreign lands. Hence, the imports that are reflected in the GDP report as consumer spending or business investments, must be subtracted to avoid inflating figures.
Economists, however, believe the slump may prove short-lived. The import-driven distortion seen in the first quarter is not expected to repeat in the April-to-June period. Many forecasters anticipate a rebound, with second-quarter GDP growth projected to reach 3%, according to a FactSet survey.
The first official estimate of second-quarter GDP is due on 30 July.
Stay informed with the latest
business
news, updates on
bank holidays
and
public holidays
.
AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
21 minutes ago
- Time of India
DoT plans mobile ID checks to curb cyber fraud
The telecom department has proposed tightening its cybersecurity rules , under which it can now direct telecom operators and other entities like banks, financial institutions, e-commerce players, etc., to verify mobile numbers or identities of users through a centralised platform, in another step to curb online fraud and spoofing. The stakeholders can verify the mobile numbers of users by paying a prescribed fee for using the platform, the Department of Telecommunications (DoT) has proposed in a draft notification to amend the Telecommunications ( Telecom Cyber Security ) Rules, 2024. "With a view to ensuring telecom cyber security and prevent security incidents, the Central Government shall by itself, or through an agency authorised by the Central Government, establish a MNV ( mobile number validation ) platform and issue directions to authorised entities and licensees, as regards the form and manner in which to participate on such platform," DoT said in the draft notification. Play Video Pause Skip Backward Skip Forward Unmute Current Time 0:00 / Duration 0:00 Loaded : 0% 0:00 Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 1x Playback Rate Chapters Chapters Descriptions descriptions off , selected Captions captions settings , opens captions settings dialog captions off , selected Audio Track Picture-in-Picture Fullscreen This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Text Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Transparent Caption Area Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Drop shadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 경고: 이 게임 진짜 중독성 쩔어요. 지금 해봐! Hero Wars 플레이하기 Undo Further, the government can issue directions to phone makers to provide assistance as required in relation to tampered devices bearing International Mobile Equipment Identity (IMEI) numbers. The manufacturers can also be asked not to assign IMEIs that are already in use in telecommunication networks in India, to new telecommunication equipment that are being manufactured in India or imported to India. Live Events As per the draft rules, the Central government shall, either directly or through an agency authorised by it, will maintain a database of IMEIs which are tampered, or whose use has been restricted. If the government considers that immediate action is necessary or expedient in public interest, it shall without issuing a notice, pass an order to the telcos to temporarily suspend the use of a mobile number. "The proposed Telecom Cybersecurity Amendment Rules 2025 represent a strong policy move toward securing India's digital infrastructure. By mandating verification of user identifiers through a centralized government platform, the regulation aims to reduce telecom-related fraud and enhance digital accountability across sectors," Tarun Wig, co-founder & CEO at Innefu Labs said. However, the broader implications include potential friction around data privacy, integration complexity, and the cost of compliance especially for smaller digital platforms and startups. "Operationalizing such a system at scale while ensuring minimal disruption and maximum data protection will be a key challenge," Wig said.
New Indian Express
24 minutes ago
- New Indian Express
Market surges 15% from April lows, edges closer to peak levels
Defying tariff and geopolitical tensions, India's equity benchmarks, the BSE Sensex and NSE Nifty, have surged nearly 15% each from their early-April lows and are now approaching record highs. Extending gains for the third consecutive session on Thursday, the Sensex jumped 1,000.36 points (1.21%) to close at 83,755.87, while the Nifty50 rose 304.25 points (1.21%) to settle at 25,549.00. The Sensex now sits just 2,200 points shy of its all-time high of 85,978, and the Nifty is within 730 points of its peak (26,277). The market had nosedived between late March and early April after U.S. President Donald Trump announced a reciprocal tax on goods imported into the world's largest economy. The move stoked fears of an all-out global trade war, with retaliatory tariffs announced by China, the EU, and others. On April 7, the Sensex had plunged about 4,000 points intraday to hit a 52-week low of 71,725 and the Nifty 50 tumbled 1,150 points to hit a low of 21,744.
Time of India
29 minutes ago
- Time of India
'Just the beginning': Vivek Ramaswamy breaks record in raising fund for Guv election campaign, $8.5 million in five months
Vivek Ramaswamy breaks record in raising fund for Ohio Governor election which will be held in November 2026. Vivek Ramaswamy has raised over $8.5 million since his announcement of Ohio Governor election bid from the Republican party following his exit from the Department of Government Efficiency. Axios reported that this much money this early in the election cycle with the primary nearly a full year away is record-breaking. For comparison, Axios reported that Gov. Mike DeWine raised $3 million in the first half of 2021 during his reelection campaign. This money does not include any personal financing from Ramaswamy who spent over $30 million of his own money to fund his presidential campaign which he withdrew to support Donald Trump. "Just the beginning of breaking records in Ohio," Vivek reacted to his fund news. What is Vivek Ramaswamy's net worth? What is his source of wealth? Vivek Ramaswamy's net worth in 2025 is estimated to be between $800 million and $1.1 billion, with most sources leaning toward the higher end, around $1 billion. His wealth primarily comes from his 7-11% stake in Roivant Sciences, a biotech company he founded in 2014, valued at over $840 million based on SEC filings and campaign disclosures. Additional wealth stems from his stake in Strive Asset Management (worth over $100 million), investments in stocks, bonds, cryptocurrencies, and real estate, including two Ohio homes valued at $2.5 million. How did Indian-origin Vivek Ramaswamy become so rich? Born in 1985 to Indian immigrant parents (his father was a General Electric engineer and attorney, his mother a psychiatrist), Ramaswamy grew up in the Cincinnati suburb of Evendale. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Trading CFD dengan Teknologi dan Kecepatan Lebih Baik IC Markets Mendaftar Undo He attended St. Xavier High School, graduating as valedictorian in 2003. With his early business acumen, Vivek while he was studying biology at Harvard co-founded a business, a tech startup that connected budding entrepreneurs with professional resources via the internet. The business was later sold to the Kauffman Foundation, a nonprofit that fosters entrepreneurs and education. After graduating from Harvard, Ramaswamy joined QVT Financial, a New York-based investment advisory firm and hedge fund manager. He also studied law at Yale University in the same batch as JD Vance. His work at QVT involved investing in biotech companies, which led to his interest in the development of new prescription drugs. Ramaswamy founded Roivant in 2014 to buy or license promising drugs that weren't a priority for their owners. Roivant would then take over the development process for the potential future medicine. The company organized its developing drugs into subsidiary companies that could be spun off into separate ventures or be sold. In 2015, Ramaswamy cashed out a piece of his Roivant stake, accounting for the majority of his nearly $37.1 million in capital gains on his tax return. A potential Alzheimer's Disease drug, called intepirdine, was the main drug under development at Axovant, a Roivant subsidiary that the company spun off in a 2015 initial public offering. The stock nearly doubled in price on the first day of trading, making the company worth nearly $3 billion. In 2021, Ramaswamy stepped down as CEO and chairman of Roivant as he pursued new ventures. Then he published his best-selling book 'Woke Inc'
