WASHINGTON (AP) — President Donald Trump got worrisome news on Wednesday about how the U.S. economy is battening down for potential fallout from his tariffs — and he was quick to try to pin the blame on his Democratic predecessor, Joe Biden.
The government reported that the U.S. economy shrank at an annual rate of 0.3% during the first three months of the year. Behind the decline was a surge in imports as companies tried to front-run the sweeping tariffs on autos, steel, aluminum and almost every country. And even positive signs of increased domestic consumption indicated that purchases might be occurring before the import taxes lead to price hikes.
Trump pointed his finger at Biden as the stock market fell Wednesday morning in response to the gross domestic product report.
“This is Biden’s Stock Market, not Trump’s,” the Republican president, who took office in January, posted on his social media site. “Tariffs will soon start kicking in, and companies are starting to move into the USA in record numbers. Our Country will boom, but we have to get rid of the Biden ‘Overhang.’ This will take a while, has NOTHING TO DO WITH TARIFFS.”
But the GDP report gives Democrats ammunition to claim that Trump’s policies could shove the economy into a recession.
“Trump has been in office for only 100 days, and costs, chaos and corruption are already on the rise,” said Sen. Jeff Merkley, D-Ore. “The economy is slowing, prices are going up, and middle-class families are feeling the pinch.”
The report landed as Trump is trying to put the focus on new corporate investments in the U.S. as he spends the week celebrating his 100th day in office. He planned remarks later in the day on the subject.
Trump’s economic message contains some clashing arguments and dismisses data that raises red flags.
He wants credit for an aggressive first 100 days back in the White House that included mass layoffs of federal workers and the start of a trade war with 145% in new tariffs against China. He also wants to blame the negative response of the financial markets on Biden, who left office months ago. He’s also saying his tariffs are negotiating tools to generate trade deals but at the same time banking on hundreds of billions of dollars in tariff revenues to help cover his planned income tax cuts.
Trump highlighted the positive aspects of the GDP report at a Wednesday Cabinet meeting. But that meeting inadvertently revealed how his administration is also trying to take credit for policies that involve the Biden administration as Commerce Secretary Howard Lutnick talked about his recent trip to Arizona to see the Taiwan Semiconductor Manufacturing Co.’s computer chip factories.
TSMC notes on its website that it announced plans in May 2020, during Trump’s first presidency as the coronavirus pandemic disrupted the global economy, to build its first plant in Arizona. It announced a second factory in December 2022, when Biden was in office. After getting up to $6.6 billion in commitments in 2024 from the bipartisan CHIPS and Science Act, TSMC announced plans for a third plant.
Trump dismissed the importance of the government support that Biden made possible for computer chip factories to open domestically.
“They’re building because of the tariffs,” Trump said.
Asked about his tariffs causing inflation, Trump told ABC News in a Tuesday interview that the economy would have eventually imploded if he didn’t impose import taxes on allies including the European Union, Canada, Mexico, Japan, South Korea and India.
“Everybody’s gonna be just fine,” Trump assured.
Democrats’ statements after the GDP report noted how quickly the economy, which still has a healthy 4.2% unemployment rate, appears to lose momentum within weeks of Trump returning.
“In just 100 days, President Trump has taken the U.S. economy from strong, stable growth to negative GDP,” said Heather Boushey, a former member of Biden’s White House Council of Economic Advisers. “This astonishing turn of fortune is directly due to the incoherence of his economic policy and his mismanagement of federal policy more generally.”
But White House trade adviser Peter Navarro told reporters that the GDP drop was a “one-shot deal” because of the increased imports, which mathematically subtract from the measure of economic activity. Navarro said that the individual and business income tax cuts planned by Trump would help growth in the months ahead.
“All we’re seeing is good, strong news,” Navarro said. “So the idea that there’s a recession coming should be heavily discounted.”
