The US economy contracted more than previously estimated in the first three months this year, according to government data.

According to the Commerce Department, real gross domestic product fell by 0.5% in the first quarter of 2025, compared to the previously reported dip of 0.2%.

Why did the US economy contract more than expected?

The decline primarily reflects downward revisions to consumer spending and exports, which were partly affected by a downward revision to imports, the Department added.

The data came after an import surge triggered by US President Donald Trump's tariffs.

This resulted in businesses stockpiling goods ahead of the tariffs, especially goods from China.

Imports expanded by 37.9%, the fastest pace since 2020, and pushed GDP down by nearly 4.7 percentage points.

The import influx is not likely to be repeated in the second quarter, and therefore it shouldn't weigh on GDP as the second-quarter growth is expected to bounce back to 3%, economists say.

Trump tariff deadline in July

Trump may have backed off or postponed some of the highest tariffs due to the ongoing trade negotiations, but the July deadline for the higher tariffs to kick in is approaching — adding uncertainty to the economy.

Trump's tariffs have pushed China and the European Union into a race to find new trade partners, with EU state saying they aim to reach out to countries in the Indo-Pacific and the Global South.

Last month, Trump suspended planned 50% tariffs on the EU until July 9.

At a summit for the NATO military alliance on Wednesday, French President Emmanuel Macron called the trade war an "aberration" and called for tariffs to be dropped after NATO allies agreed to a pledge to dedicate 5% of GDP to defense spending.

Edited by: Saim Dušan Inayatullah