US economy shrinks by 0.3% in Q1 first time in 3 years amid tariff talks: Report 

The United States economy witnessed a contraction for the first time in three years, shrinking by 0.3% in the first quarter. This downturn has been attributed to a record surge in imports, which has led to a significant increase in the goods trade deficit. Economists initially predicted a 0.3% GDP growth for the period from January to March, reflecting the previous quarter's growth of 2.4%. However, data released on Tuesday prompted a re-evaluation, highlighting the impact of burgeoning imports on economic performance, news agency Reuters reported on Wednesday.

The decline in GDP comes amid growing consumer discontent and waning business confidence, with sentiment reaching near five-year lows. This atmosphere of uncertainty has been exacerbated by the impact of tariffs, notably a 145% levy on Chinese imports, which has strained trade relations between the US and China. The tariffs, introduced as part of the Trump administration's broader strategy to revitalise the industrial base, have led to increased costs across various sectors, affecting both businesses and households.

Despite the contraction, consumer spending has continued to grow, albeit at a moderate pace. Analysts suggest that the GDP figures may overstate the economy's struggles due to an unusually large amount of non-monetary gold accounting for part of the import surge. 

Nonetheless, the data reflects an economy grappling with the consequences of trade tensions and the complexities of tariff policies. Concurrently, inflation has shown an upward trajectory and is expected to rise further throughout the year, with economists anticipating potential interest rate cuts by the Federal Reserve. 

In line with his initial 100 days in office, President Trump's economic performance has increasingly sparked disapproval among Americans. Despite his election victory being fueled by concerns over the economy, particularly inflation, recent indicators suggest a decline in consumer confidence and business sentiment. Uncertainty surrounding tariffs has prompted airlines to retract their 2025 financial projections, as economists caution about potential cost increases for both businesses and households.

President Trump's economic policies, especially his tariff strategies, have faced mounting criticism in recent times. An executive order recently issued aims to mitigate the impact of auto tariffs by offering relief from other levies on parts and materials. While this move is designed to soften some economic pressures, it may not suffice to fully restore confidence among businesses and consumers disillusioned by the administration’s economic management. 

The continuation of high tariffs on Chinese goods has perpetuated the trade war between Washington and Beijing, intensifying the challenges facing the US economy. As these dynamics unfold, various sectors experience ripple effects, including predictions of continued inflationary pressures and potential adjustments in monetary policy.