The US economy unexpectedly contracted in the first three months of the year on an import surge triggered by Donald Trump’s tariff plans, although the president pinned the blame squarely on his predecessor.
The sharp increase in imports was a reflection of businesses and consumers stockpiling foreign goods to get ahead of Trump’s sweeping trade levies, which went into effect earlier this month.
All three major Wall Street indices fell on the economic news, before paring losses to close mixed, while oil prices extended their losses.
At a cabinet meeting in Washington, Trump insisted the growth downturn was the legacy of former president Joe Biden’s policies.
“That’s Biden, that’s not Trump,” he said.
Striking a more positive tone, he highlighted the “whopping” 22 percent rise in gross domestic investment during the first quarter.
Annual economic growth stayed above two percent in every year of Biden’s presidency, reaching 2.8 percent in 2024.
The gross domestic product (GDP) of the world’s largest economy decreased at an annual rate of 0.3 percent in the first quarter, after growing 2.4 percent in the final months of 2024, according to Wednesday’s first estimate from the US Commerce Department.
This was sharply below the market consensus estimate of 0.4 percent growth, according to Briefing.com, and marked the first quarterly contraction since 2022.
The Commerce Department said in a statement that the contraction was in large part down to an “upturn in imports,” aided by a decline in consumer and government spending.
