Tariff tracker: The USA's real gross domestic product (GDP) decreased at an annual rate of 0.3 per cent in the first quarter of 2025 (January, February, and March), according to the advance estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2024, real GDP increased 2.4 per cent. The real GDP essentially refers to the total value of goods and services produced inside the US, calculated after taking away the effect of inflation. This is the first set of hard data that has shown that the world’s largest economy is not doing as well under President Donald Trump as it was doing under President Joe Biden — until now only soft data (opinions and surveys) suggested so. This is the first such contraction since early 2022 and it was largely triggered by a huge surge in imports as consumers and companies anticipated Trump’s tariffs. However, President Trump blamed the contraction on Biden and advised patience. In a Truth Social post he said: “Our Country will boom, but we have to get rid of the Biden “Overhang.” This will take a while, has NOTHING TO DO WITH TARIFFS, only that he left us with bad numbers, but when the boom begins, it will be like no other. BE PATIENT!!!” The latest GDP print has given credence to the anecdotal view held by many market experts that the US is either already in a recession (that is, two quarters of back to back negative GDP growth) or heading fast towards it before 2025 gets over. But Trump suggested that even that may be Biden’s fault. “This is a quarter and we took charge on January 20th. So this is Biden. And you can even say the next quarter is also Biden…” said Trump during a televised cabinet meeting. Trump instead chose to focus on how badly China was getting hit. To be sure, China’s GDP grew at a better than expected 5.4% in the same quarter. On the markets front, if one looks at year-to-date, all US benchmark indices — S&P 500, Dow Jones Industrial Average, Nasdaq 100, Russell 2000 — are now down anywhere between 5% to 12% since the start of the year. Even if one goes back to as far back as November 1, that is, before the US election, these indices are down at least 2-3%. Similarly, the US dollar has lost strength not just against all its traditional peers such as the Japanese yen, the Swiss franc and the euro — falling close to 10% this year — but also against the Chinese yuan and Canadian dollar, the two economies that attracted the most punishment from Trump’s tariffs. On the trade deals front, US Trade Representative Jamieson Greer reportedly told the media that while the Trump administration expects to conclude initial tariff deals with some US trading partners within weeks, yet negotiations with India are not “finish-line close” and no official talks with China are under way.
