Siem Reap Times

Tuesday, May 20, 2025

U.S. Economy Shrink in Trump’s First Quarter as Tariff Policy Raises Questions

President Blames Biden for Downturn While Economists Point to Early Tariff Effects

The U.S. economy shrank by 0.3% in the first quarter of 2025, marking the first contraction in over a year and delivering an early economic blow to President Donald Trump just months after returning to office. The decline follows 2.4% growth in the final quarter of 2024 under President Joe Biden, highlighting the steep reversal in economic momentum.

President Trump, speaking at a Cabinet meeting Thursday, rejected any responsibility for the downturn. “You probably saw some numbers today,” he said. “That’s Biden. That’s not Trump. We came in on January — and we inherited an economy that was already being destroyed in so many ways.”

While the White House blamed the previous administration, economic analysts say Trump’s own early policies may have contributed to the decline — particularly the announcement of aggressive new tariffs on imported goods, which were unveiled in early April.

Although the tariffs had not yet gone into effect during the first quarter, they caused a preemptive spike in imports from businesses seeking to avoid the incoming duties. This surge inflated the trade deficit, one of the key drags on GDP growth during the January–March period.

“It’s not just carryover from the Biden era,” said a senior economist at the Brookings Institution. “Expectations matter, and when companies accelerate imports ahead of tariffs, it distorts the balance of trade and weakens growth in the short term.”

Tariffs as Central Economic Policy

President Trump has made trade protectionism a core theme of his second-term agenda, doubling down on tariffs as a tool to reshape global commerce and reduce reliance on foreign manufacturing. The new tariff regime—announced in April—includes steep levies on goods from China, Mexico, and the European Union, and is intended to incentivize domestic production.

“I didn’t want a complicated deal,” Trump said of the policy shift. “We needed a simple way to fix what Biden broke. Tariffs are how we protect American workers and American factories.”

But critics argue that the timing of the tariffs may have created short-term economic whiplash without yielding immediate benefits. Economists warn that if retaliatory measures or rising input costs follow, the second quarter could bring further instability.

Political Stakes Rise

The figures present a challenge for President Trump, whose return to the White House was driven in large part by promises to restore economic strength and tame inflation. With the cost of living remaining high and growth now negative, voter confidence could be tested just as the administration approaches its first 100-day mark.

“This goes to the heart of why Trump was re-elected,” said Sarah Smith, North America editor reporting from the White House. “He promised to fix the economy—and now it appears to be shrinking.”

The administration has not indicated any immediate changes to its economic plan, with officials insisting the downturn is temporary and not reflective of the policies now being implemented.

“We’ll see the real impact of our reforms in the next quarter,” Trump said. “What’s important is we’re building long-term strength.”

For now, markets and voters will wait for the second quarter to see whether the administration’s gamble on tariffs will pay off — or deepen the early economic slide.

Newsletter

Related Articles

Siem Reap Times
0:00
0:00
Close
President Biden’s announcement of advanced prostate cancer sparked public sympathy—but behind closed doors, Democrats are in panic
Thailand and Indonesia Strengthen Bilateral Relations to Enhance ASEAN Cooperation
US Administration Signals Potential Tariffs for 18 Trade Partners
Mount Lewotobi Laki-Laki Erupts Again, Spewing Ash Cloud over Flores Island
A Chinese company made solar tiles that look way nicer than regular panels!
Thai Prime Minister to Host Indonesian President in Bangkok
Japan to Enhance Strategy for Quantum Technology Industrialization
Asean Ministers Urge Unity Amid Global Economic Volatility
Rodrigo Duterte Arrested and Transferred to The Hague Amid ICC Charges
U.S. and Philippine Forces Test High-Powered Microwave Weapons in Joint Exercise
Indian jet shootdown: the all-robot legion behind China’s PL-15E missiles
China Unveils Advanced AI Surveillance Tools at 12th Police Equipment Expo
Japan's Three Major Banks Report Record High Net Profits for Second Consecutive Year
The Chinese Dragon: The True Winner in the India-Pakistan Clash
China Rebukes US Trade War Tactics Amid Ongoing Tensions
Australia's Venomous Creatures Contribute to Life-Saving Antivenom Programme
NVIDIA to Open R&D Center in China as Shanghai Promises Tax Incentives
The Spanish Were Right: Long Working Hours Harm Brain Function
Did Former FBI Director Call for Violence Against Trump? Instagram Post Sparks Uproar
US and UAE Partner to Develop Massive AI Data Center Complex
Apple's $95 Million Siri Settlement: Eligible Users Have Until July 2 to File Claims
Surge in Visa-Free Entries Boosts International Tourism to Shenzhen
This Kenyan reporter trying to keep a straight face
Strong Warning Issued: Do Not Use General Chatbots for Medical, Legal, or Educational Guidance
U.S. FDA to Remove Oral Fluoride Supplements for Children Amid Gut Health Concerns
Kim Kardashian Testifies in Paris Robbery Trial, Tells Gang Leader: 'I Forgive You'
NVIDIA and Saudi Arabia Launch Strategic Partnership to Establish AI Centers
Why Saudi Arabia Rolled Out a Purple Carpet for Donald Trump Instead of Red
Nissan Plans to Cut Over 10,000 Additional Jobs Worldwide
Trump says it would be 'stupid' not to accept gift of Qatari plane
8-Year-Old Orders 70,000 Lollipops Using Mother’s Phone, Prompting $4,200 Amazon Bill and Viral Facebook Plea
Quantum Computing Threatens Bitcoin Security
Michael Jordan to Serve as Analyst for NBA Games
American citizens account for 70% of worldwide pharmaceutical sales despite comprising only 4% of global population
US and China Agree to Reduce Tariffs by 115% in Bilateral Trade Deal
Early Vote Count Favors Allies of Vice President Sara Duterte in Philippine Senate Elections
Zelenskyy Seeks Ceasefire as Putin Proposes Direct Talks in Turkiye
U.S. and China Reach Preliminary Trade Agreement Amid Ongoing Tensions
Macau's Renowned 'House of Dancing Water' Relaunches with a Modern Makeover
Rodrigo Duterte Awaits Trial at The Hague. Next week he might be elected mayor of his hometown
Trump says U.S. and China negotiated "total reset" in tariff talks
Cardinal Robert Prevost Elected as Pope Leo XIV, Marking a Historic Papacy
Trump, in a major concession, says the tariff on China should be 80% — but will leave it up to Bessent
India-Pakistan conflict may be first test for Chinese military tech
Philippines Reports First Case of H5N9 Bird Flu Virus
Bill Gates Announces Plan to Wind Down Philanthropic Foundation and Disperse Wealth
First From China: Zhao Xintong Wins the Snooker World Championship
Common Sense Returns to Britain's Legal System: UK Supreme Court Declares a Woman Is… a Woman
EU Hits TikTok with €530 Million Fine Over China Data Transfers
Beijing Says U.S. Is ‘Reaching Out’ for Tariff Talks Amid Soaring Trade Tensions
×