WASHINGTON – Surging US imports in the first quarter are seen as an inaccurate reflection of the current economic stagnation, largely caused by President Donald Trump's tariff war, launched on 2 April 2025.

The spike in imports was driven by companies rushing to mitigate rising costs stemming from Trump's unpredictable and disruptive tariff policies, which have affected economic stability.

The US Commerce Department's preliminary Gross Domestic Product (GDP) report, released on Wednesday (30 April), while not as bleak as anticipated, is viewed by many economists as overestimating the extent of the slowdown.

The report comes amid growing public dissatisfaction with Trump’s handling of the economy during his first 100 days in office.

Several major airlines have withdrawn their 2025 financial projections, citing uncertainty over discretionary travel spending due to import tariffs.

Joe Brusuelas, Chief Economist at RSM America, stated that trade disruptions are now overshadowing all other achievements from the White House.

“The rapid shift from trade shock to financial shock, and even the risk of a recession within less than 100 days, should serve as a warning to supporters of these tariffs,” he added.

A Reuters survey of economists forecasts annual GDP growth at just 0.3%, the lowest level since Q2 2022.

However, recent trade data shows a sharp rise in the US goods trade deficit for March, prompting many economists to downgrade their predictions. Goldman Sachs now anticipates an economic contraction of 0.8%.

While some analysts argue that this data fails to provide a complete picture of the economy, largely due to a surge in non-monetary gold imports, uncertainty remains high.

The Atlanta Federal Reserve’s analysis model projects a 1.5% decline in GDP, while the New York Federal Reserve forecasts a 2.6% increase.

Matt Colyar, an economist at Moody’s Analytics, described Trump's inconsistent tariff announcements as creating widespread uncertainty.

“Everyone now realises that the goods they buy will become more expensive,” he said.

On the inflation front, the core Personal Consumption Expenditures (PCE) index, which excludes food and energy prices, is expected to rise by 3.3% in this quarter, up from 2.6% in the previous quarter. This raises the likelihood that the Federal Reserve may cut interest rates again this year.

Although Trump issued an executive order to ease automotive tariff impacts, the 145% tariffs on Chinese goods remain in effect, further prolonging the US-China trade war.

Meanwhile, consumer spending—the largest component of the US economy—has declined, as people rush to make purchases ahead of potential price hikes. With the labour market showing signs of weakness, saving trends are becoming dominant.

Economists suggest shifting focus to “final sales to private domestic buyers” to gain a more accurate economic picture, as current GDP figures are heavily distorted by trade and inventory fluctuations.

However, Lou Crandall, Chief Economist at Wrightson ICAP, warned that consumer spending itself has been skewed by stockpiling ahead of tariff implementation. “This surge in consumption likely overstates actual domestic output growth,” he noted. (EF/LM)