US economy contracts in Q1 as tariffs unleash flood of imports

The US economy contracted for the first time in three years in the first quarter, swamped by a flood of imports as businesses raced to avoid higher costs from tariffs and underscoring the disruptive nature of President Donald Trump's often chaotic trade policy.

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The Commerce Department's advance gross domestic product (GDP) report on Wednesday, however, grossly exaggerated the economy's dimming prospects. Though consumer spending slowed considerably, the pace of growth remained healthy. Businesses also boosted investment in equipment.

Nonetheless, both consumer and business spending likely reflected front-loading before the import duties kicked in. As such, the report reinforced Americans’ growing disapproval of Trump’s handling of the economy as he marks 100 days in office.

Trump swept to victory last November on voter angst over the economy, especially inflation. Consumer confidence is near five-year lows and business sentiment has tanked, while airlines have pulled their 2025 financial forecasts, citing uncertainty over spending on nonessential travel because of tariffs, which economists said will raise costs for companies and households.