President Donald Trump’s aggressive tariff policy disrupted global trade and slowed growth before even taking full effect. In the first quarter, U.S. GDP fell by 0.3% — the first decline since the pandemic recovery — driven by a 51% surge in imports as businesses rushed to stockpile goods ahead of expected price increases.

The average U.S. tariff rate rose above 20% by early April 2025, the highest in a century, affecting imports from countries like China, Canada, Mexico, and the EU. Sector-specific tariffs (25% on steel, aluminum, and cars) followed.

Reduced government spending and slower consumer growth also contributed to the economic slowdown, despite a rise in business investments, largely due to accelerated equipment purchases.

The tariff-driven import rush briefly boosted exports from China and the EU, but orders dropped sharply after tariffs took effect. China’s growth is now projected to slow to 3.5%, while the Eurozone saw better-than-expected growth (0.4%) in Q1, which may weaken in Q2 due to U.S. demand decline and new trade barriers.

Analysts warn the U.S. could face a technical recession in the second half of 2025 if the trend continues.