US Economy Struggles Amid Trump Tariffs and Layoffs

Washington, D.C. — The U.S. economy faced its worst quarter since 2022, driven by President Donald Trump’s abrupt policy changes that unsettled consumers and businesses. The Commerce Department reported a 0.3% annualized growth rate for the first quarter of 2025, a decline from 2.4% in the previous quarter.

Economists have linked the slowdown to Trump’s aggressive tariffs and increased imports as businesses and consumers raced to buy goods before higher costs set in. This rush may have inflated import levels, which detracts from GDP calculations. Experts also cited unusual cold weather and uncertainty around Trump’s policies as contributing factors to the weakened economic performance.

Nathan Sheets, global chief economist at Citigroup, noted the prevailing concern regarding the impact of tariffs. “You’ve got this economic concern from how tariffs are going to affect the economy and markets that people are really struggling with,” he told CNN.

As part of his trade approach, Trump has imposed steep tariffs on various goods, including a 25% tariff on aluminum and steel, and a staggering 145% on Chinese imports. The trade deficit has worsened significantly, reaching $130.6 billion in January, a 34% increase from the previous period. Although it dipped to $122.7 billion in February, that figure remains one of the largest ever recorded.

Additionally, economic activity reflected a broader unease, with consumer spending weak at the start of the year. Retail sales declined by 0.9% in January. However, March saw a surge in spending as consumers aimed to beat impending price increases from tariffs.

The effects of Trump’s policies have also been felt in the federal labor market, where nearly 121,000 federal employees have been laid off or targeted for layoffs since the beginning of his second term. This retrenchment has raised concerns about the government’s ability to provide essential services across various sectors.

With prices likely to climb and continued uncertainty surrounding trade, economists warn that Trump’s trade strategy could lead to a recession. The Federal Reserve Bank of Atlanta predicts a more severe drop in GDP of 2.7% for the first quarter, marking significant turbulence in the U.S. economy.