US GDP Set to Shrink 0.4% in Q1 as Trump Tariffs Spark Economic Shock

- U.S. Q1 GDP projected to shrink by 0.4% - Trump tariffs and inflation cited as main causes [Unblock Media] April 30, 2025, The U.S. economy is expected to record a 0.4% contraction in the first quarter, attributed to a combination of factors including the Trump administration's new tariff policies, persistent inflation, and a global economic slowdown. On April 2, 2025, President Trump declared an "economic emergency," imposing at least a 10% tariff on all imports and up to 145% high tariffs on Chinese products. In retaliation, China imposed up to 125% counter-tariffs on U.S. products, escalating trade tensions. These tariff policies directly affect major industries such as steel, aluminum, and automotive parts, with the automotive industry particularly concerned about rising production costs leading to higher consumer prices. The U.S. Consumer Price Index (CPI) for March rose by 2.4% year-on-year, indicating ongoing inflation. Notable increases in food and housing costs have reduced consumer purchasing power. This leads to increased production costs for businesses, resulting in reduced employment and investment, thereby burdening the overall economy. The ISM Manufacturing Purchasing Managers' Index (PMI) released on April 1 indicated a contraction phase at 49.0, down from the previous month. This reflects a decrease in new orders and a slowdown in production, suggesting potential contraction in manufacturing employment and investment. Additionally, the March employment report released on April 5 showed an increase of 228,000 jobs in the nonfarm sector, but the unemployment rate rose to 4.2%, indicating signs of a labor market slowdown. The schedule for upcoming key economic indicators is as follows: the ISM manufacturing data will be released on May 1, the April employment report on May 3, the April Consumer Price Index (CPI) on May 13, and the preliminary estimate for Q1 GDP on May 29. These indicators are expected to significantly impact the Federal Reserve's monetary policy decisions and market direction. The U.S. economy currently faces several challenges, including tariff policies, inflation, and slowdowns in the manufacturing and job markets. Upcoming economic indicators are expected to provide clearer insights into these trends.