In 100 days, Trump has destroyed his economy: US GDP unexpectedly shrinks

Frankfurter Rundschau In 100 days, Trump has destroyed his economy: US GDP unexpectedly shrinks Bona Hyun • 14 hours • 3 minutes read Is a "Trump Cession" coming? Trump's tariff policy remains unpredictable. However, a look at the economic figures should give the president pause: the economy is shrinking. Update from April 30, 2:30 p.m.: The US gross domestic product (GDP) fell by 0.3 percent in the first quarter, annualized, according to the US Department of Commerce. At the end of 2024, the US economy had grown by 2.4 percent. First report from April 30, 10:20 a.m.: Washington D.C. – Trade war, tariff chaos, and stock market crash: US President Donald Trump only needed a few days in office to cause complete uproar around the world. As with many decisions made by the US president, the question arises whether Trump is fully aware of the magnitude of his decisions regarding tariffs. The domino effect resulting from the tariffs not only puts pressure on the global economy and key trading partners, but Trump's plans could also have a knock-on effect on his own economy. Trump's tariffs dampen hopes for the American economy – slow growth and decline expected The US government will publish an estimate of gross domestic product (GDP) for the first quarter of 2025 on Wednesday (April 30, 2025). The forecasts are less optimistic in the lead-up to the election. While experts do not expect the US economy to shrink in the first quarter, several indicators point to a slowdown in growth, and some experts even consider a decline in growth possible. Trade war, tariff chaos, and stock market crash: US President Donald Trump needed only a few days in office to cause complete uproar around the world. Analysts at the financial information and analytics firm Morningstar expect a significant slowdown in GDP growth: They forecast growth of 0.8 percent in 2024, following growth of 2.4 percent in the fourth quarter. Economists at Goldman Sachs expect negative growth of 0.2 percent, while Bill Adams, chief economist at Comerica Bank, anticipates negative growth of 1.4 percent. Meanwhile, according to CNN, the Federal Reserve Bank of Atlanta forecasts a sharp decline of 2.5 percent, which would mark the worst quarter since mid-2020. At the same time, concerns about a recession—also referred to in this context as the "Trump Cession"—are growing. Adams sees a 40 percent probability of a recession. Fears of a recession had also unsettled investors in particular. Trump's tariffs lead to import surplus – "Major headwind for the US economy" The reason for the slow economic growth is Trump's tariffs, which led to a trade deficit. When imports exceed exports, this reduces GDP. According to trade data (published in March 2025), there was a $162 billion gap between imports and exports. The increase in the trade deficit was almost entirely due to an increase in imports. Trump's tariff threats triggered a rush to buy goods, which led to a "terrifying surge in imports," Oliver Allen, senior US economist at Pantheon Macroeconomics, told the Financial Times. The economy probably hadn't anticipated such a sharp increase in imports. "The biggest headwind for the economy in the first quarter was the sharp increase in imports. This means that companies spent more money bringing goods into the country to avoid tariffs than on domestically produced goods and services," explains Adams. What could happen after Trump's tariffs – Consumer and business sentiment dampened Trump's tariff policy is also affecting consumer and business sentiment. Economists say there were signs in the first quarter that spending was stalling. They are likely to cut back on purchases in the coming months, particularly for expensive consumer goods. "We see stronger growth initially, but there is a risk of a slowdown in demand afterward," Greg Daco, Chief Economist at EY, told Morningstar. "The more demand is brought forward, the worse this slowdown will be." So far, Trump has imposed reciprocal tariffs, but he announced a 90-day tariff pause at the beginning of April 4. However, the minimum rate of ten percent remained in place. The tariff rate against China even increased: a 145 percent levy now applies to most Chinese imports.