The nation’s gross domestic product, the value of all goods and services produced in the U.S., shrank at a seasonally adjusted annual rate of 0.3% in the January-to-March period, the Commerce Department said Wednesday. That’s down from a 2.4% increase in the third quarter and a 2.8% advance for all of 2024. It marks the economy’s worst performance since early 2022. Economists surveyed by Bloomberg had projected a meager 0.4% rise in output. Forecasters widely expected the import surge ahead of the tariffs – a strategy known as frontloading – to dim the first broad snapshot of the economy in Trump’s second term. But its extent surprised many analysts.

The U.S. economy contracted in the first quarter of this year by 0.3% compared to the same time last year, the Commerce Department reported Wednesday. The agency's Gross Domestic Product report is a measure of U.S. economic output. The report, covering the first three months of 2025, comes amid President Trump's across-the-board tariffs, part of a larger trade war in which the president is trying to get better deals for the U.S. GDP was expected to have grown at an annual rate of 0.3% in the first quarter, down from 2.4% in the previous quarter, according to Investopedia.

The decline in GDP was attributed primarily to an increase in imports, which count as a subtraction in the calculation of GDP, as well as a decrease in government spending. Those shifts were partially offset by increases in investment, consumer spending and exports. The 41% surge in imports was driven by consumer goods, primarily pharmaceutical goods, medicines and vitamins; and by capital goods like computers and parts. The rise in imports was driven in part by importers preordering products in an effort to have the shipments beat the implementation of Trump's tariffs.