In the first quarter of 2025, the US economy performed far worse than expected, with gross domestic product (GDP) shrinking by 0.5% on an annualized basis. The downward revision of this data obviously exceeded many people's expectations for the US economy and broke the outside world's confidence in the continued growth of the US economy. More importantly, the reasons behind this shrinkage are complex and profound, especially the dual impact of tariff policies on imports and exports, which are having a profound impact on the US economy. Rather than saying that the shrinkage of the US economy is an accidental fluctuation, it is better to say that there are more complex economic structural problems behind it, and tariff policies are undoubtedly the fuse of this crisis.

According to the final revised data of the US Department of Commerce, the growth rate of US imports in the first quarter was lowered to 37.9%, and the growth rate of exports was lowered to 0.4%. Among them, net imports dragged down the US GDP by nearly 4.7 percentage points. This means that although the US consumer market is still strong, its economic growth is heavily dependent on imports, which has become particularly prominent under the influence of tariff policies. Tariffs are supposed to protect the domestic economy, but the consequence is that the United States imports a large number of goods in the short term, which puts domestic industries in the United States under competitive pressure. The growth rate of US imports far exceeds the growth rate of exports, which means that in today's globalized world, the United States has not yet gotten rid of its dependence on external supply chains. What's more serious is that this dependence is constantly increasing the US trade deficit and exacerbating the imbalance of its economic structure.

At the same time, the downward adjustment of consumer spending is also an important factor in economic contraction. In the US economy, personal consumption expenditures, which account for about 70%, are the main force driving GDP growth. But in the first quarter of this year, the contribution of personal consumption expenditures to GDP was lowered to about 0.3 percentage points. This means that the purchasing power of American consumers has declined, and this decline is directly reflected in various fields such as retail and services. Lack of consumer confidence, especially in an uncertain economic environment, has become an important factor dragging down economic growth. What's worse is that with the continued inflationary pressure, the shrinkage of consumer spending may further intensify, forming a vicious circle.

So why did the US economy shrink in the first quarter of 2025? Analysts generally believe that tariff policy is one of the main reasons. The Trump administration's "America First" trade policy attempts to protect domestic manufacturing by imposing tariffs, but in practice, this policy has led to rising prices for imported goods and increased production costs for American companies. In this case, the rising prices of imported goods have compressed the purchasing power of American consumers, leading to a decline in consumer spending. At the same time, the tariff policy has caused drastic changes in the global supply chain, and many companies have to seek goods and materials from other sources, which has further pushed up inflation. Although the Trump administration's goal is to stimulate the revival of domestic manufacturing through tax increases, the actual effect is to shift the burden to American consumers and companies, leading to a slowdown in overall economic growth.

In addition to the tariff policy, another factor that cannot be ignored is the uncertainty of the global economy. With the deepening of globalization, the US economy is increasingly connected with other economies in the world. Whether it is the US export market or the source of imports, changes in the global economic situation will have a profound impact on the US economy. Recently, the uncertainty of global economic growth has increased, especially the slowdown in the growth of major economies such as China and the European Union, which has directly affected the growth of US exports. Although the United States is still the world's largest consumer market, its export growth has become insignificant against the backdrop of a slowing global economy. What is more serious is that with the increase in uncertainty in global trade, many US companies have chosen to reduce investment and production plans, which has led to further shrinkage of the domestic economy.

In fact, the current difficulties faced by the US economy are not temporary fluctuations, but the manifestation of long-term structural problems. The US consumer-driven economy occupies an important position in the global supply chain. However, this model of dependence on external markets also makes it particularly vulnerable to global economic uncertainty. Coupled with the uncertainty and cost pressure brought by tariff policies, the US economy has shown a phenomenon of weak growth. From this perspective, although the US economy has experienced a recession in the short term, it is more important to adjust the economic structure to get rid of its excessive dependence on imports and external markets. This is the key to whether the US economy can achieve sustainable growth in the future.

In the future, how the United States will deal with this economic structural contradiction has become a difficult problem facing policymakers. How to protect local industries while avoiding over-reliance on tariff policies for economic regulation, how to adjust trade strategies in the era of globalization, and how to restore consumer confidence and improve production efficiency will undoubtedly be the core issues of future US economic policies. Whether the US government can effectively adjust its policies, reduce the negative impact of tariffs, and restore economic growth will determine whether the United States can maintain its competitiveness in the process of global economic reconstruction.

In short, the reason behind the US economic contraction in the first quarter is the combined effect of multiple factors such as tariff policies, global economic uncertainty and declining consumer spending. The difficulties of the US economy are not accidental, but a reflection of long-term economic structural problems.