What’s going on with the US economy?

The first quarter of 2025 is officially in the books, ending a period highlighted by the transition of power in Washington and an aggressive tariff agenda from the incoming Trump administration.

First things first: Many sectors of the US economy were affected by President Trump’s tariff plans, which have repeatedly changed since he took office in late January.

• As it stands today, new tariffs are in effect for all steel and aluminum imports (25%), all goods from Canada and Mexico that aren’t USMCA-compliant (25%), and all goods from China (20%).
• But Trump’s biggest tariff-related moves are scheduled for later this week, when wider reciprocal tariffs on all global trading partners kick in and the tariff exemption for USMCA-compliant goods expires.

An overall update

Here's a rundown of America’s current economic situation heading into Q2:

• Inflation: The CPI rose 2.8% year-over-year in February, down from 3.0% in January. Core inflation stood at 3.1% in February, down from 3.3% the previous month and its lowest reading since April 2021.
• Stocks: All three major US indexes fell in Q1, with the S&P 500 and Nasdaq delivering their worst quarters since 2022 (S&P: -4.6%; Dow: -1.3%; Nasdaq: -10.4%).
• Consumer spending: This sector, which accounts for 65+% of all economic activity, rose an inflation-adjusted 0.1% in February following a 0.6% decline in January (the largest monthly drop since 2021).
• Jobs: America’s unemployment rate stood at 4.1% in February, down slightly from 4.2% the previous month prior. Overall, the US jobless rate has risen slightly since hitting a modern low of 3.4% in April 2023.
• GDP: America’s economy grew by ~0.3% in Q1 2025, per economists polled by CNBC, down sharply from 2.3% growth in Q4 2024. Analysts say Q1 GDP appears to be influenced by a one-time surge of imports ahead of new Trump admin tariffs.

Looking ahead…Tomorrow is “Liberation Day,” when Trump’s global reciprocal tariffs and expanded 25% tariffs on Canada and Mexico take effect.