Surge in imports drives US GDP down as businesses navigate Trump tariffs

Surging imports to the US have slowed economic growth in the first quarter, leading to a 0.3% contraction, new data published Wednesday showed, sending US stock markets into the red on open.

The negative reading reflected “the record widening of the US trade deficit” as businesses sought to stockpile inventories ahead of President Donald Trump’s tariffs, Ryan Weldon, investment director at IFM Investors told Semafor via email. The president argued that the GDP slowdown has “nothing to do” with import duties.

Americans have not entirely pulled back on spending — possibly in order to get ahead of the duties — the data showed, although economists have warned that is likely on the horizon; the most recent ADP job report found private payrolls rose just 62,000 in April, suggesting a dramatic slowdown in hiring. The Labor Department is due to report its employment data for last month on Friday.

Meanwhile, consumer sentiment has also declined, while inflation appears to be rising. Global head of market strategy at TradeStation David Russell told Semafor in an email that “the numbers increasingly suggest a recession may have begun.”