US economy shrinks 0.3% in first quarter amid trade wars

The U.S. economy contracted by 0.3% in the first quarter, marking its first decline in three years. This drop was largely due to increased imports as companies rushed to stock up before tariffs were imposed by President Trump.

Gross domestic product growth fell from 2.4% in late 2024. Imports reduced growth by 5 percentage points, while consumer spending and federal government spending declined sharply.

However, business investment surged by 21.9%, and a key GDP category measuring economic strength rose by 3%.

Trump's trade policies, including significant tariffs on China, have disrupted business and could negatively impact prices for consumers.