Xinhua News Agency, Washington, May 10th　Title: Abuse of tariffs has aggravated U.S. economic uncertainty

  Xinhua News Agency reporter Xiong Maoling

  Data released by the U.S. Department of Commerce recently showed that in the first quarter of 2025, the U.S. gross domestic product (GDP) shrank month-on-month. Observers believe that due to the increased tariffs imposed by the US government, companies have significantly increased imports and hoarded goods in advance, dragging down economic growth in the first quarter. In the long run, US tariff policies will continue to intensify uncertainty, which may lead to an increase in inflation and unemployment rates. The impact of tariffs on the US economy may further emerge in the future.

  Data shows that in the first quarter of this year, the U.S. GDP shrank by 0.3% on a year-on-year basis. This is the worst quarterly performance of the U.S. economy since 2022.

  The U.S. Department of Commerce said that the shrinking GDP in the first quarter was mainly dragged down by a sharp increase in imports and a decrease in government spending. Specifically, net exports in the quarter dragged GDP by 4.83 percentage points. This shows that businesses are concerned about the possible rise in import tariffs in the future, thus hoarding inventory on a large scale. In the quarter, federal government spending fell by 5.1%, dragging economic growth by 0.33 percentage points.

  Wells Fargo economists pointed out in a report that the shrinking U.S. GDP in the first quarter reflected a "sudden change" in trade policy. This change has caused a significant drag on the economy by net exports, with a drag of the highest level in more than half a century.

  Federal Reserve Chairman Powell also said at a press conference on the 7th that GDP declines in the first quarter of this year mainly reflect fluctuations in net exports. This may be caused by companies importing in advance before the implementation of the new tariff policy.

  The Federal Reserve ended a two-day monetary policy meeting on the 7th and announced that it would maintain the target range of the federal funds rate between 4.25% and 4.50%. This is the third time that the Federal Reserve has "stayed" in a row since its meeting in January and March this year. The Federal Open Market Committee, the Federal Reserve's decision-maker, said in a statement issued on the same day that "there is an increase in the risk of rising unemployment and increased inflation." This is something that was not found in the previous statement, reflecting the Federal Reserve's concerns about the latest economic situation.

  Asked about the actual impact of the tariffs, Powell said Fed officials have noticed changes in consumer sentiment, and people are concerned about the impact of tariffs and may rise, but the impact has not really shown on economic data. He said the Trump administration's new policies are still evolving and its impact on the economy remains "highly uncertain." If the announced drastic tariff increase measures continue to be implemented, it may lead to higher inflation, slowing economic growth and rising unemployment.

  Many American economists believe that the ongoing uncertainty in trade policies may pose a challenge to economic growth in the coming quarters. As the negative impact of tariffs on the economy becomes more apparent, the U.S. economy will slow down and even fall into recession.

  Dean Baker, senior economist at the Center for Economic and Policy Research, believes that in such an uncertain environment, companies are unwilling to invest, and many families will postpone large-scale consumption. Baker said tariffs will definitely slow down economic growth, and future economic growth may not be negative, but will definitely be weak.

  The Kubessi briefing of the US financial analysis account recently pointed out that a number of indicators show that the US economy fell into recession in 2025 has become a "basic expectation."

  Barry Bosworth, a senior fellow at the Brookings Institution in the United States, told Xinhua News Agency reporters that the possibility of domestic demand shrinking in the second quarter is high and GDP may continue to decline. Generally speaking, US research institutions define GDP growth as negative for two consecutive quarters.

  Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics and a former Treasury official, told reporters that he does not believe the White House will make concessions that will restore confidence in businesses and consumers. “I’m on the side that thinks the economy will fall into recession.”

  Observers pointed out that U.S. President Trump had promised to lower inflation during his campaign, but rising tariffs made it more difficult for inflation to fall to its target level, and could even lead to further inflation, which would put pressure on the U.S. government.

  Mike Pence, who served as vice president in Trump's first term, has repeatedly publicly criticized the Trump administration's new round of tariff policies. He recently refuted Trump's recent remarks about American children reducing toys in an interview with CNN, saying that toys that make children affordable for families are a manifestation of the "American Dream." Pence believes that the upcoming "price shock" and potential "commodity shortage" will force Americans to "request for the White House to take different approaches."

[Editor in charge: Wu Jingze]