US, China Economies Contract as Tariff Tensions Grow

The U.S. economy contracted by 0.3% in the first quarter of 2025, marking the first decline since 2022 and falling short of economists' growth expectations, which led to immediate stock market losses. This contraction is primarily attributed to a surge in imports as businesses stockpiled goods before President Trump's new tariffs on Chinese products took effect. President Trump blamed the weak GDP on a 'Biden Overhang' despite evidence that pre-tariff import activity and trade disruptions were the main causes, and that economic indicators under Biden had been stronger. In China, manufacturing also contracted due to the mutual tariffs, compounding global market uncertainty. Companies like Temu and Shein have shifted focus to Europe as U.S. tariffs hit their e-commerce exports, raising costs for American consumers. The Atlanta Fed projects 2.4% growth for Q2, but economists warn that declining consumer confidence and inflation could impede recovery.