Trump Tariff Turbulence: US GDP contracts 0.3% in Q1 as bulls stare at trade uncertainty; Dow crashes over 750 pts

US GDP Contraction Due to Imports: The world's largest economy contracted 0.3 per cent in the March quarter, making a U-turn after a 2.4 per cent expansion in the previous three months, showed official data released on Wednesday. The development comes at a time when many analysts are blaming US President Donald Trump's back and forth on the tariff front though he has paused reciprocal tariffs on most of America's trade partners. Economists say that the economic contraction in the first quarter of 2025 was on account of a deluge of imports in an apparent attempt by American businesses to deal with higher costs going forward.

According to an advance macroeconomic estimate by the Bureau of Economic Analysis under the US Commerce Department, the United States' gross domestic product (GDP) decreased an annualised 0.3 per cent in the quarter ended March 31.

The latest US GDP rating comes in sharp contrast with a widely expected mild expansion.

US businesses apparently lined up their imports in anticipation of higher costs going forward.

Many economists believe that the trend highlights the nature of the chaotic repercussions of Trump's trade policy moves.

US stocks began the day deep in the red, with the bulls reacting to the negative economic reading.

The Dow Jones Industrial Average (DJIA), one of the two main Wall Street benchmarks, tumbled as much as 782 points, or 1.9 per cent, to 39,745.6 minutes after the news.

Separate data on Tuesday showed that the US merchandise trade deficit hit a peak in March amid unprecedented monthly imports.

The macroeconomic data comes close on the heels of the 47th American President completing his first 100 days in office.

On Tuesday, Trump signed an executive order approving additional relief for American automakers from a 25 per cent duty on automobiles and their parts announced recently, saying it would help the industry give more impetus to domestic production.

The development narked the latest softening of Trump's tariff action on trading partners as he seeks to crack trade deals aimed at lowering other countries' barriers to American exports. ALSO READ: Trump 100 days: What promises has he kept, and what’s still pending?

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