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Trump Acknowledges Potential Costs of Tariffs Amid Economic Slowdown

President Trump admits tariffs may lead to higher prices and fewer goods, as the U.S. economy shrinks 0.3% in Q1 2025.


Overview

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In April 2025, China's manufacturing contracted with a Purchasing Managers' Index of 49.0 amid escalating U.S. tariffs. Concurrently, the U.S. economy shrank by 0.3%, marking its first contraction in three years as businesses hastily imported goods prior to tariff implementation. Despite inflation cooling at 2.3% year-on-year and a 0.7% increase in consumer spending, President Trump acknowledged that tariffs may result in fewer goods and higher prices. He framed these consequences as less impactful on American consumers compared to the challenges faced by China's economy, while Democrats criticized his economic policies as damaging and potentially recessionary.

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Analysis

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US tariffs of up to 145% on Chinese goods are significantly damaging China's manufacturing and export sectors, leading to the lowest PMI since December 2023.

The government's efforts to provide stimulus measures may not be sufficient to counteract the severe impacts of the trade war, with expectations of further economic decline.

There's a push from Chinese officials to avoid appeasement in negotiations with the US, highlighting a defiance against perceived US aggression in the trade policies.

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US economy shrinks as firms import more ahead of tariffs
BBC NewsBBC News·2M·
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Trump admits tariffs could create shortages, hike prices
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Americans doubt Trump’s trade war will benefit them
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Trump Blames Biden for Wobbly Stock Market
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Trump Blames Biden for Wobbly Stock Market
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Trump Blames Biden for Wobbly Stock Market
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History

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  • 2M
    Associated Press logo
    Rolling Stone logo
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    31 articles
  • 2M
    ABC News logo
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    Boston Herald logo
    18 articles
  • 2M
    CNN logo
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    3 articles