Trump’s First Economic Quarter

After reflecting upon how Donald Trump spent his 100th day in office, it is worth considering the economic data that coincided with this political milestone. The day after Trump spoke with ABC News and attended a rally in Michigan, a series of economic results were published reflecting the state of markets during the first quarter of 2025. The Trump administration only took office on January 20, so the extent to which it could truly be held entirely accountable for events during this quarter is debatable, however, that notwithstanding, the results made interesting reading, especially as they do not take into account the direct impact of the tariff policy that kicked in on April 2, the very start of Q2.

Although the tariffs had not been introduced, they had been anticipated, leading to bulk buying of foreign goods in a concerted attempt to get ahead of the anticipated announcement of Liberation Day. This was seen to have had a negative impact on the US balance of trade, which, when combined with concerns about an anticipated imminent increase in prices, and an attending negative impact on consumer spending, led to a 0.3% reduction in the nation’s GDP. This was in sharp contrast to the previous quarter that had seen a 2.4% increase in growth.

No matter how the Trump White House seeks to spin these numbers, they make for concerning reading. Economists warned of an impending recession for the duration of Joe Biden’s presidency. They warned that the market was overheated and of the need for a soft landing. The White House even attempted to change the definition of a recession when faced with a downturn in the market and rampant inflation. Regardless of whatever semantics the Biden administration engaged in, the economy is now 100% owned by Donald Trump and his ability to reinvigorate the quarterly figures will have a huge bearing on how his administration is perceived and on his party’s political standing ahead of next year’s all-important mid-term elections.

While there was a widespread belief that the economy would shrink in Q1 regardless of whoever prevailed in last year’s election, these figures will be seized upon by Democrats as evidence of what they see as being Donald Trump’s financial irresponsibility. The White House, meanwhile, will doubtless use them as further evidence of the need to cut interest rates and bring even greater public pressure on the chairman of the Federal Reserve, Jerome Powell, to do so quickly, and bring figures in line with those in Europe and the UK.

The state of the economy was at the heart of Donald Trump’s campaign for a second- non-consecutive term as president, and in many ways, things have taken an upturn since his election: Unemployment stands at 4.2%, inflation is at 2.4%, and the price of gasoline has fallen in most states. Prices are falling in stores, and the price of eggs is no longer a subject of national debate. The latest GDP figures, however, coupled with the introduction of tariffs, appears likely to have a negative impact on consumer spending, a vital component in the nation’s economic wellbeing. The American society is driven by consumption and if people stop spending the economy will grind to an almighty halt no matter how the stock market responds to the tariff policy.

The Trump administration recognizes that it is dealing with a very tight window of opportunity to implement sweeping economic reforms and is moving at breakneck speed to do so. The use of executive orders is being implemented to truncate the time taken by congress to agree upon anything, especially given the need to secure super-majorities in many cases, which is unrealistic in the current political climate. The White House maintains that the president is making good upon his campaign pledges, to address vital, long-term issues that have been overlooked by successive administrations to the detriment of the nation. These policies reflect Donald Trump’s long-held belief that the nation has routinely been taken advantage of by her international allies and adversaries, that its diplomats negotiate poorly and that the continuing trade deficit was damaging to the long-term interests of the United States.

The introduction of tariffs on what the Trump administration termed Liberation Day was designed to introduce shock and awe into world markets and force foreign nations to negotiate new bilateral trade agreements with the United States to enable great access to markets and generate vast revenues until that occurred. The policy has already witnessed promises of $7-8 trillion in inward investment by companies eager to avoid tariffs. Apple has likewise agreed to move its i-phone manufacturing from China to India, as nations begin the process of negotiating to reduce tariffs and secure trade deals.

The stock market has been seen to respond immediately as nations appear to fall in line. India, Japan, and South Korea appear likely to be in the first group of nations to agree terms with the White House, increasing the likelihood of other nations quickly following suite. The anticipation must be that Q3 will see the announcement of key bilateral agreements, allowing the White House to move into the new year with a series of economic victories under its belt with which to wage the vital mid-term elections. Make no mistake, there are very real political issues at stake in these economic decisions, and whilst the president’s opinion ratings appear to have taken a hit in some polls, the Democrats are in even worse shape.

The economy was key to Donald Trump’s election. It will also be key to his party’s ability to retain control of the congress, and thereby to Trump’s capacity to direct policy and avoid yet another effort to remove him from office. It is no exaggeration, therefore, to state that the White House is betting the midterm elections, and its own political survival, on the state of the national economy and its ability to recalibrate the global economic system in its favor.