The US economy shrank for the first time in three years due to Trump's tariff policy.

According to the US Department of Commerce, the country's economy shrank by 0.3% in the first quarter of 2025, marking the first contraction in the last three years. This was due to a sharp increase in imports as companies sought to avoid increased costs from new tariffs. This is a result of President Donald Trump's destructive trade policy.

Key indicators:

• Imports increased by 41.3%, the largest growth since the third quarter of 2020
• The trade deficit reached a historic high, reducing GDP by a record 4.83 percentage points
• Consumer spending rose by 1.8%, less than 4.0% in the fourth quarter
• Business investment in equipment increased by 22.5%
• The PCE price index (excluding food and energy) showed a rise of 3.5%, compared to 2.6% in the previous quarter

Economists note that this report may exaggerate the threats to the economy, but uncertainty and higher taxes, particularly tariffs, may slow GDP growth by the end of the year.

Consumer sentiment is at its lowest in the last five years, and business conditions have significantly deteriorated. Airlines have even cancelled their financial forecasts for 2025 due to uncertainty regarding unnecessary travel costs from tariff policies.

Trump's tariff policy, which includes a 145% tariff on Chinese goods, has led to a trade war between the US and China. The President views tariffs as a tool for increasing revenue, compensating for promised tax breaks, and reviving US industry.

The Federal Reserve is expected to lower interest rates again later this year.