- The U.S. economy shrank 0.3% in Q1, mainly due to a massive spike in imports ahead of Trump’s new tariffs.
- Trump blamed Biden for the downturn, claiming it’s still “his stock market” despite being over 100 days into his term.
- Markets slid and economists warned of stagflation, while critics accused Trump of turning a strong economy into a slump.
The U.S. economy just wrapped up its worst quarter in three years, shrinking by 0.3% from January through March. It’s a jarring shift from the 2.4% growth seen at the end of 2024—and most of the blame’s falling on a surge in imports ahead of new Trump tariffs.
Businesses rushed to stock up before the White House’s sweeping trade policies kicked in, causing imports to spike over 50%. And in the GDP math, all that foreign stuff gets subtracted. So yeah, it dragged the numbers down—hard.
Trump: “It’s Biden’s Stock Market, Not Mine”
President Trump wasted no time distancing himself from the mess. On Truth Social, he claimed the economic dip was leftover damage from the previous administration. “This is Biden’s Stock Market, not Trump’s,” he wrote, urging Americans to “BE PATIENT!!!”
At a Cabinet meeting, Trump went even further—saying Biden might still be responsible for the next quarter too, even though Trump’s now 100+ days into his second term. “It’s a big ship to turn around,” he said.
Stock Market Tumbles, Tariff Fears Surge
Markets didn’t love any of it. The Dow dropped 569 points, S&P 500 fell 1.7%, and the Nasdaq slid 2.1%. Volatility shot up as investors responded to both weak economic data and ongoing tariff uncertainty.
Several companies flagged the tariffs during earnings calls. Super Micro warned it would miss targets, and Snap declined to give guidance, blaming economic shakiness.
Mixed Messages on the Hill
Republican lawmakers had varied takes. Sen. Thom Tillis said it’s hard not to be disappointed, while Sen. John Kennedy chalked it up to “consumer behavior.” Some, like Sen. Jerry Moran, just asked for patience.
But others warned Trump won’t be able to pin this on Biden much longer. “Once you get elected,” Tillis said, “you own the economy.”
Economists Say It’s Not a Recession… Yet
Experts were split. Some saw a short-term dip driven by trade distortions. Others warned it could snowball. Final sales to domestic buyers—a more stable metric—actually rose 3.9%, which is pretty solid.
Still, some are raising red flags: inflation ticked up, consumer spending slowed, and business confidence is looking shaky.
Fed Faces a Dilemma
The Federal Reserve? Kind of stuck. Inflation is still running hot—up 3.7% in Q1—so rate cuts are probably off the table for now. But with growth falling and tariffs adding pressure, they’ve entered a weird zone of stagflation: low growth, high inflation, no easy answers.
Jason Schenker of Prestige Economics put it bluntly: “It’s the worst of both worlds for the Fed.”
Trump Allies Defend, Biden Allies Fire Back
While Trump keeps calling it a “Biden Overhang,” economists and former Biden officials are pushing back. They argue Trump inherited a strong economy—and quickly made a mess of it.
Andrew Bates, a former Biden spokesman, didn’t hold back: “We’re plummeting toward a Trumpcession.”
