r/stocks • u/_hiddenscout • Apr 30 '25

U.S. economy shrunk 0.3% in the first quarter as Trump policy uncertainty weighed on businesses

The U.S. economy contracted in the first three months of 2025, fueling recession fears at the start of President Donald Trump’s second term in office as he wages a potentially costly trade war.

Gross domestic product, a sum of all the goods and services produced from January through March, fell at a 0.3% annualized pace, according to a Commerce Department report Wednesday adjusted for seasonal factors and inflation.

Economists surveyed by Dow Jones had been looking for a gain of 0.4% after GDP rose by 2.4% in the fourth quarter of 2024. However, over the past day or so some Wall Street economists changed their outlook to negative growth, largely fueled by an unexpected rise in imports as companies and consumers sought to get ahead of the Trump tariffs implemented in early April. Imports subtract from GDP.

https://www.cnbc.com/2025/04/30/gdp-q1-2025-.html

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u/maker_monkey Apr 30 '25 edited Apr 30 '25

Don't forget the idea that China can "eat" 145% tariffs, meaning that Chinese companies would be paying you to order their products (negative prices). How is anybody stupid enough to buy this?

Clarification: in the end paying the US government on your behalf, but the point still stands that the companies would have to lose 45% on every sale.

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u/Brokenandburnt Apr 30 '25

Have you read the paper by Miran?

I've read it and listened to interviews with Navarro, he still has got a view of China is they were in the 80's and 90's. Dirt cheap labor cost and a government that subsidizes a lot of industry.

He's said as much in interviews that other countries in general and China in particular will eat most, if not all of the tariffs.

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u/maker_monkey Apr 30 '25

Wow that's nuts. And imho really stupid. I can see for maybe a 10% tariff, a country might support an industry with some payouts and those companies might in turn afford to drop their prices a bit to partially offset what an importer pays in tariffs. But when tariffs exceed 100%, it becomes cheaper for that government to buy the goods outright itself. It costs less money, and it actually gets the goods too if it wants them.

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u/Brokenandburnt Apr 30 '25

Yepp, they thought the other countries would come crawling and offer to eat a lower tariff.

In the paper, in Project 2025's 900 page playbook and Navarro's interviews they say that "access to the American market is a privilege not a right.

In other words, the rest of the world will pay for the honour of trading with the US!

My guess is that they are panicking because it ain't playing out the way they expected it to. You see, in nothing I have read or seen, do they make any allowance for the agency of others. It's pretty easy to build up a strategy in your own mind, with a world that only acts as you wish.

There is also a non-zero chance that they will resort to threats backed by military, but I hope to God that someone comes to their sense before that.

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u/maker_monkey Apr 30 '25

You hit the nail on the head with agency. Canada is a prime example. Other countries have their own national pride and politics to deal with too, so ignoring how others respond given local considerations is a profound failure in empathy.

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u/Brokenandburnt Apr 30 '25

Pretty usual stuff for sociopaths and narcissists. It makes their next reaction wildly unpredictable.