The US economy is beginning to suffer from the Trump effect

In the first three months of Donald Trump's administrationThe US economy has already begun to show signs of weakness.Official data indicate that in the first quarter of 2025, GDP contracted by 0.3% year-on-year, a negative growth not seen since the pandemic. The reasons are diverse, but analysts agree that Trump's erratic policies, especially the tariff war, are beginning to impact not only corporate results but also consumption patterns. And this data does not yet reflect the effect of the so-called "liberation day," which fell on April 2 and caused a stock market earthquake of such magnitude that it forced the US president to reverse course and declare a 90-day truce on the tariffs he wanted to impose on the entire world.

This first quarter, however, does reflect the impact of tariffs on its neighbors, Mexico and Canada, and part of the taxes on China, so what it caused was a significant increase in imports. In other words, consumers decided to purchase foreign products due to the possibility of higher prices. The fact is that the outlook for the second quarter is even worse, because the trade war with China is already having an impact on supply chains, because tourism is declining due to the reluctance of many Europeans and Canadians to travel to the United States, and because the general uncertainty about Trump's policies is undermining consumer confidence in the future. If negative growth continues in the second quarter, the United States will have entered a technical recession, and then we will have to wait and see how both the economic sectors and the many citizens who voted for Trump hoping that their standard of living would improve will react, only to find that the exact opposite is happening.

Meanwhile, Trump spent this Wednesday celebrating his first 100 days with a triumphant speech, boasting about mass deportations, criticizing judges who stand in the way of his plans, and making it clear that the poor economic data is not his responsibility but the result of politicians' policies. But one look at the markets shows that no one believes this rhetoric, and fear continues to dictate investor behavior.

And yet another note: there are two months left until the end of the tariff truce, and there is still no sign of the "big deals" Trump promised he would achieve in a short period of time. In fact, what has happened these past few weeks is that neither China nor Europe have accepted the blackmail of tariffs. In the north of the country, in Canada, liberal Mark Carney just won an election he had lost with a very clear rhetoric of standing up to Trump and not being intimidated. The next few weeks will be crucial, because so far Trump has only backed down when forced by the markets and the economy.