The U.S. economy contracted 0.3% at an annualized pace in Q1, driven largely by companies ramping up imports to front-run U.S. President Donald Trump’s tariffs. This was the first negative GDP number for the U.S. since Q1 of 2022.
Imports rose 41.3%, with goods imports rising 50.9% as companies try to get ahead of impending price increases amid an escalating U.S. trade war against much of the planet. Inflation rose 3.6%, up from 2.4% in Q4 of 2024. When combined with ADP data showing just 62,000 new private jobs being created in April, fears of a recession are mounting. At time of writing, the Dow is down over 600 points on the news.
Trump is seeking to deflect blame, blaming a Biden “overhang” and saying growth will “take a while”: “This will take a while, has NOTHING TO DO WITH TARIFFS, only that he left us with bad numbers, but when the boom begins, it will be like no other. BE PATIENT!!!” said Trump.
Trump’s attempt to shift blame is not only factually incorrect – the import surge is a clear response to fears of negative impacts from tariffs – but also indicates the political pressure facing the U.S. President. Trump’s tariffs are increasingly unpopular, and his overall approval ratings are declining. This gives Canada and other nations leverage with the United States. Rather than offering excessive concessions, we can let the pressure within the U.S. economy and political system build, raising the odds of a broad U.S. pullback from tariffs altogether.
Spencer Fernando
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