Recession Blues Mark Trump's 100 Tariff Days

It was a told-you-so moment. Official US government data released recently showed the US economy had shrunk 0.3 percent in the first 3 months of the year, down from a growth of 2.4 percent in the last quarter of 2024.

- GURBIR SINGH

With tariffs pushing up prices for US consumers in the second quarter, a possible further slowdown looms large. The US is now on the brink of a technical recession, defined as two consecutive quarters of negative growth.

The chaos and slowdown was not the best way for President Donald Trump to celebrate his first 100 days in office. But he kept up his strident posture. Blaming his predecessor, Trump said: "This is Biden's Stock market, not Trump's"; and the contraction "has nothing to do with tariffs."

Economists though concur the contraction has been triggered by an unprecedented surge of imports, the highest in 5 years; and it was driven by a stampede of consumers and companies stockpiling goods before the tariffs kicked in. Some argue since imported goods are not produced domestically, their value is subtracted from GDP, and therefore this factor has contributed significantly to a negative reading of the first quarter. Therefore, once these inventories are sold, and the trade gap narrows, the US' GDP may rebound.

Global slowdown What these economists have not factored is the sharp and continuing fall in consumer sentiment; and the threat of inflation and rising prices that kill demand. Consumer sentiment in the US has plummeted 32 percent in April, the lowest since the recession of 1990. Trump acknowledged this in jest when he suggested American children should learn to play with 2 dolls instead of 20.