Poor trade policies already negatively impacting GDP

The U.S. economy contracted at an annualized 0.3% rate in the first quarter, as a rush to import goods ahead of President Trump's tariffs weighed on economic growth, the Commerce Department said on Wednesday. It's the first contraction in three years, a sign that the economy was losing momentum before the highest tariffs took effect. It is a sharp turnaround from the 2.4% growth rate in the final months of 2024. It is the weakest GDP print since the same period in 2022, when the economy contracted at a 1% annualized rate, similarly weighed down by volatile categories like trade and inventories. The GDP data covers the Jan.-March period, though trade tensions intensified shortly thereafter. The White House imposed a 10% universal tariff in April, alongside steep reciprocal tariffs that were later paused for 90 days, but it ramped up its crackdown on U.S.-bound Chinese goods with a levy of 145% that prompted retaliation. That has choked off trade between the two nations. In some ways, the White House appears to be softening its approach, with tariff concessions for the auto industry and some electronics, but there is no clear path for lower tariffs, with mixed messages about whether the White House is engaged in trade negotiations with China. The fate of economic growth might largely rest on White House trade policy, assuming no other economic shocks down the line.