The US economy contracts in the first quarter of the Trump administration.

WashingtonDonald Trump's first 100 days in the White House have resulted in a contraction of the US economy. The ghosts of recession heralded by JP Morgan and other companies in the face of the US president's trade war have reappeared in the country's quarterly GDP report, which fell 0.3% year-on-year in the first quarter of 2025. The data are provisional and were published this Wednesday by the Bureau of Economic Analysis of the Department of Commerce. Trump, as he did with the spike in egg prices in February, has blamed his predecessor Joe Biden for the poor results.

"This is Biden's bag, not Trump's. I didn't take office until January 20th. The tariffs will start taking effect soon, and companies are starting to move to the US in record numbers. Our country will prosper, but we have to act." nothing to do with tariffs, just that he left us with bad numbers, but when the boom starts, it will be like no other. "Be patient!" he wrote this morning in a post on Truth Social. As if that weren't enough, during the cabinet meeting, Trump also told reporters that even if there is another poor GDP result, it will also be Biden's fault. "You could even say that the next quarter will be Biden's thing, too..." he commented.

According to the published data, several factors have caused the sharp drop, and one of the reasons is tariffs. Net exports, the difference between what the United States imports and exports, have subtracted almost 5 percentage points from overall GDP. This is the largest quarterly drop in net exports since 1947. Meanwhile, consumer spending has only grown by 1.8%. This is significantly lower than the previous six months. In addition, federal spending has also decreased due to cuts by the Elon Musk-led Government Efficiency Department, which was supposed to put an end to the alleged waste of public funds.

Wednesday's macroeconomic results further call into question the US president's economic management, who has made tariffs the cornerstone of his plan to make the country rich again. Trump is so convinced that even on Tuesday night, during his 100-day speech in Michigan, he allowed himself to boast that he knew more about economics than Federal Reserve Chairman Jerome Powell. "I have a person at the Federal Reserve who really isn't doing a very good job. You're not supposed to criticize the Federal Reserve, you're supposed to let them do their job, but I know a lot more about interest rates than he does," the president said Tuesday night.

The Fed has kept interest rates frozen since Trump took office due to the unpredictability of his economic policy. Furthermore, despite the fact that annual inflation slowed in March, economists predict that the tariffs will eventually translate into higher prices. Some analysts also warned of the weakening of the dollar as a result of the protectionist measures.

As much as Trump denies the negative impact of his tariffs and claims that the country will experience an economic "boom," the measures of recent weeks go in the opposite direction. The magnate has already implemented a (partial) trade truce worldwide, has lowered his tone with China, and on Tuesday approved palliative measures for the US automobile industry. The day after the tariffs on vehicle imports went into effect, the giant Stellantis temporarily laid off 900 workers in Detroit. Likewise, General Motors withdrew its profit forecast for 2025 on Tuesday, citing the tariffs on cars.

The cooling of GDP comes amid the uncertainty that Trump has caused in the economy since he began his trade war. Before the reciprocal tariffs and 145% taxes on China, the president had already begun to destabilize the stock market by ending free trade with his neighbors, Mexico and Canada. February was marked by threats to impose 25% tariffs on all Mexican and Canadian imports and by constant reversals regarding the measure. The stock market then experienced several shocks in the face of an imminent rise in prices for many of the goods and products that Americans consume.

Tariff War

In fact, the tariff war began with Trump going to Mar-a-Lago to play golf without having yet signed the 25% tariffs that were supposed to go into effect the next day. It wasn't until he finished playing golf that Saturday morning that he signed the executive order. A measure that, for now, remains on hold for all products covered by the USMCA (the Mexico-United States-Canada free trade agreement).

However, other tariffs were already being applied at that time, such as the 25% tariff on China—which was added to other taxes already imposed during the Biden era—the 25% tariff on steel and aluminum, and the most recent: the 25% tariff on vehicle imports, if we leave aside the 145% tariff in Beijing. Furthermore, although there is a 90-day tariff truce with the rest of the countries, it is only partial, and a universal 10% tariff is being applied to all imports.