First quarter GDP tanked as there were so many panic purchases from other countries before Trump’s tariffs were rolled out

• US importers quickly stocked up This spring, at an unprecedented pace, bringing in items before consumers could buy them. This has caused negative first-quarter GDP estimates and panic in the market, but economists say it is not necessarily a sign of a weakness.

The US economy was reversed during the first three months of the year as it signed gross annual product at 0.3% per year.

culprit? The tariffs announced by President Donald Trump, which timing led to competition to stock up on businesses, dragging GDP counts.

But that is not a sign of economic damage. Rather, negative numbers reveal a habit of how gross domestic product, the sum of all economic activity in the country, is calculated.

“We rarely advise clients to ignore economic reports entirely, but advance first GDP reports are approaching falling into that category,” Capital Economics wrote in a research briefing on Tuesday.

GDP is calculated by summing business investments, government and consumer spending and exports, and subtracting imports. In the long run, deducting imports is ineffective, Capital Economics explained. Negative imports are shown as positive numbers when businesses place goods in warehouses or when consumers buy them from shelves.

But this is where timing matters. Early in Trump’s tariff announcement, businesses quickly picked up a large number of items in the US, stockpiling items before consumers had the opportunity to buy them. This has made GDP count negative.

Many businesses took cargo to the forefront even before Trump officially took office, and in December 2024 the US trade deficit surged. GM accelerated freight from Mexico. Food importers were far more drawn in Parmigiano Reggiano of Italy Traders have replenished steel than usual, Reuters It has been reported.

Trump quickly announced tariffs on steel and aluminum, threatening, postponing tariffs in Mexico and Canada, and announced in his “his.”Release date“An announcement. We have set a 30-day deadline for tariffs from most American trading partners. He later postponed most of those taxes as well.

“While consumer goods imports are 55% higher than a year ago, retail spending data shows that sales of those goods are not operating near that pace,” Capital Economics said.

The result is that while the economic contraction from January to March appears dramatic, they don’t say much about what’s actually happening.

“We’re in uncharged waters,” says Bill Adams, Chief Economist Comerica The bank said in a memo. “GDP report for the first quarter states that the economy is less than usual given the economic trajectory given the major changes in April.”

Apart from trade, the measurement of consumer spending and business investment is fairly sound, indicating that the economy is slowing but not crashing. The 5% decline in federal spending promoted by the government’s Department of Efficiency (DOGE) sent lower GDP than otherwise, while sales to domestic buyers rose at a healthy 2.3% rate, while corporate investments that were stronger than expected pushed the numbers even further.

However, as tariffs are now in place and set to increase, much of the spring activity has evaporated. As of mid-April, shipments from China were like that. Almost 30% lower According to the supply chain platform Project44, it is more than the previous year.

“In two weeks, all cargo from China for major retailers and manufacturers will be stopped, and arrivals will be reduced by 35% as cargo coming out of locations in Southeast Asia will be much softer than usual,” said last week, executive director of the Port of Los Angeles.

This means that while the economy looked much worse on paper than it is real in the quarter, the opposition is likely to be true in the coming months.

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“The higher the tariffs, the longer they surround them, and the greater the uncertainty surrounding them, the higher the chances of a recession,” he said.

This story was originally introduced Fortune.com