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Business & Economy
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Business & Economy
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US economy backtracks amid sweeping Trump tariffs
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Gross domestic product (GDP) shrank during the first quarter of 2025 as a surge of imports ahead of President Trump’s tariffs took a bite out of economic growth calculations.
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U.S. GDP fell at an annualized rate of 0.3 percent during the first three months of the year, according to data released Wednesday by the Commerce Department, after an annualized increase of 2.4 percent in the fourth quarter of 2024.
Economists had expected U.S. GDP to fall amid a steep increase in orders of foreign products, which could be far more expensive once Trump’s full slate of tariffs take effect.
“The drop seems to be wholly due to tariff-related distortions,” economists at Pantheon Macroeconomics wrote in a Tuesday preview of the report.
“GDP likely would have risen in the absence of the dramatic shift in policy. Underlying momentum in growth was undoubtedly waning before the tariff shock, though, and in its aftermath we now expect activity to stagnate this year.”
The first-quarter import surge took roughly 5 percentage points off of the GDP growth rate, according to the Commerce Department, washing out nearly 4 percentage points from domestic investment and roughly 1 percentage point from consumer spending.
The Hill’s Sylvan Lane has more here.
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Welcome to The Hill’s Business & Economy newsletter, I’m Aris Folley — covering the intersection of Wall Street and Pennsylvania Avenue.
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Key business and economic news with implications this week and beyond:
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5 takeaways from a flurry of economic data after Trump’s first 100 days
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Wall Street and Washington, D.C., are wading through a surge of economic data this week as markets and policymakers attempt to game out the results of President Trump’s policies.
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Trump says he should get time on economy
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President Trump on Wednesday said he thinks he should be given time to improve the economy, asking for patience from top executives amid concerns over how his tariffs have rattled the stock market.
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Companies sharply slow hiring in April: ADP
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Companies sharply slowed hiring in the month of April amid market fluctuations and the rollout of President Trump’s latest tariff plan, a new report from Always Designing for People (ADP) found.
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The real cost of smaller companies cutting back on health benefits
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While not legally mandated at a federal level, health insurance is generally considered to be an essential employee benefit in the U.S.
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Welcome a new newsletter feature focused on the fight over tax reform and the push to extend the 2017 Trump tax cuts this year.
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Republicans meet to hash out SALT
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Republicans were scheduled to meet Wednesday afternoon about the state and local tax (SALT) deduction cap, one of the thorniest issues facing the party as they work to extend the 2017 tax cuts.
The 2017 cuts capped the deduction at $10,000, alienating Republicans in higher-tax blue states where the deduction was popular among wealthier taxpayers.
Members of the Congressional SALT caucus seeking to raise the cap have floated various numbers, including $20,000, $30,000 and $60,000. President Trump pledged to “get SALT back” while on the campaign trail last year.
“[SALT caucus member] Mike Lawler (R-N.Y.) has advocated for a cap closer to $60,000, but we expect the compromise proposal to come in much lower given the cost of a higher cap and its potential to squeeze out other tax priorities that need to fit into the bill,” political consultants Beacon Policy Advisors wrote in a Tuesday brief.
— Tobias Burns
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Upcoming news themes and events we’re watching:
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- House GOP spending cardinals are set to meet with OMB Director Russell Vought on Thursday, as Congress braces for President Trump’s fiscal year 2026 budget request.
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Stay ahead of the political trends by signing up for The Hill’s Evening Report newsletter. Click here to sign up
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Branch out with more stories from the day:
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Meta’s first quarter earnings, revenue beat Wall Street’s expectations
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Instagram and Facebook parent Meta Platforms Inc. posted better-than-expected results Wednesday for …
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Business and economic news we’ve flagged from other outlets:
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- Dow rises more than 100 points, S&P 500 books third straight losing month (CNBC)
- A ‘p*ssed’ Trump called Jeff Bezos after learning Amazon considered breaking out a tariff charge (CNN)
- The home of Elon Musk’s SpaceX could become an official Texas city called Starbase (The Associated Press)
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Top stories on The Hill right now:
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US, Ukraine sign mineral deal
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The United States and Ukraine signed their long-awaited mineral deal on Wednesday according to the Treasury Department. Read more
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3 House Democrats ask to be removed from Trump impeachment resolution
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A trio of House Democrats asked to be removed as co-sponsors of a resolution to impeach President Trump, a sign that many in the party do not want to go down the path of trying to remove the president from office — at least at the current moment. Read more
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Opinions related to business and economic issues submitted to The Hill:
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- The next 100 days will reveal how the White House handles debt
- Sadly, the scammers are winning — but our government can help.
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You’re all caught up. See you tomorrow!
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