Joseph Palitano breaks down the contribution of tariffs to the shrinking economy.
The US economy shrank at the beginning of 2025 for the first time since the recession scares of early 2022—GDP contracted at a 0.3% annualized rate, a major downgrade from the 2.4% growth registered at the end of last year. The culprit was the massive economic drag from trade wars, with companies and consumers forgoing business-as-usual to stock up on foreign goods before Trump’s massive tariffs took effect. The trade deficit expanded to record highs in Q1, with investment jumping as American businesses stored or installed their imported goods.
