Tariff Whiplash: Trump’s First 100 Days Put the U.S. Economy on the Brink

Trade wars, falling growth, and rising recession fears.

Overview of the First 100 Days

President Donald Trump’s return to the White House in January 2025 has coincided with growing signs of economic strain. In his first 100 days back in office, multiple indicators of U.S. economic health have weakened or reversed course, raising emerging concerns of a possible recession. Key metrics such as GDP growth, consumer confidence, and stock market stability have deteriorated compared to late 2024, even as the labor market remains relatively resilient. The administration’s aggressive policy moves – notably a new round of import tariffs – have been a central factor in shaking business confidence and stirring uncertainty about the economic outlook reuters.com)~. Below is a snapshot of major economic indicators comparing the end of 2024 to the early months of 2025:

Table: Key U.S. economic indicators around the start of 2025, showing a softening economy in President Trump’s early tenure. Sources: U.S. Bureau of Economic Analysis, Bureau of Labor Statistics, University of Michigan Surveys of Consumers, U.S. Federal Reserve.

GDP: From Growth to a Mild Contraction

Real GDP, percent change from preceding quarter (seasonally adjusted annual rate). Q1 2025 saw a slight decline following solid growth in 2024. (Source: U.S. Bureau of Economic Analysis)

After robust expansion through late 2024, U.S. economic output contracted in the first quarter of 2025, marking an abrupt turnaround. According to the Bureau of Economic Analysis, real GDP decreased at a –0.3% annual rate in Q1 2025, compared to +2.4% growth in Q4 2024 bea.gov. This slight contraction is the first quarterly decline in U.S. GDP in several years and has set off alarm bells about a stalling economy. The drop was driven primarily by a surge in imports and a pullback in government spending, which more than offset continued gains in consumer spending, business investment, and exports bea.gov. In other words, underlying private-sector demand held up moderately, but net trade and public outlays dragged GDP into negative territory.

Analysts tie these trends directly to policy shifts in the new administration. Businesses rushed to import goods ahead of impending tariffs, causing imports to spike (imports subtract from GDP) reuters.com. Federal spending, meanwhile, cooled as the new government imposed austerity measures and let certain programs lapse, contributing to the downturn bea.gov. Consumer spending growth also downshifted sharply – from a brisk 4% annualized pace in late 2024 to about 1.8% in Q1 2025 – indicating that household outlays have lost momentum reuters.com. On a more positive note, private business investment jumped in the first quarter reuters.com, possibly reflecting efforts to build domestic capacity or adjust supply chains in response to trade uncertainties. Even so, total GDP slipped into decline, raising concerns that the expansion is faltering.

These early data have led forecasters to slash their growth expectations for 2025. Goldman Sachs, for example, cut its full-year GDP outlook to just 1.3% growth, while Wells Fargo now projects only 1.0% and J.P. Morgan foresees a potential slight contraction (around –0.3%) reuters.com. Some economists warn that if current trends continue, the U.S. could enter a “period of stagnation” or even an outright recession in the coming quarters reuters.com. Pantheon Macroeconomics noted that a stagnation is likely if new tariffs remain in place, and that “recession [is] the most likely outcome” should the sweeping import duties announced by Trump take full effect later this year reuters.com. In short, the GDP data from Trump’s first 100 days paint a picture of an expansion grinding to a halt, with policy-induced shocks amplifying the slowdown.

Labor Market: Job Growth Slows as Unemployment Edges Up

The job market has remained a relative bright spot through the first 100 days, though signs of cooling are evident. Unemployment stood at 4.2% in March 2025, roughly unchanged from 4.1% at the end of 2024 bls.gov mrinetwork.com, and still historically low. However, this masks a slight uptick from the rock-bottom jobless rates seen earlier in the post-pandemic recovery. The jobless rate has hovered in the 4.0–4.2% range since mid-2024, indicating a plateauing of the prior downward trend bls.gov. Importantly, unemployment is no longer falling – a subtle warning sign that the labor market’s era of ultra-tight conditions might be ending.

Meanwhile, job creation has downshifted from the blistering pace of recent years. U.S. employers added an average of roughly 150,000 jobs per month in the first quarter of 2025, a slower pace than the previous year’s monthly gains bls.gov. In January and February, payroll growth barely exceeded six figures, before rebounding to +228,000 in March bls.gov. March’s stronger hiring was above expectations, but it partly reflected one-off factors (such as the return of workers from a temporary strike) and revisions showed weaker hiring in the prior two months bls.gov. Over the past year, monthly job gains have averaged just ~158,000, markedly below the post-pandemic boom averages bls.gov. In short, hiring is continuing but at a cooler rate, consistent with an economy running out of spare capacity and facing headwinds.

Crucially, no widespread layoffs have materialized yet across the broader economy – a positive sign. Sectors like health care, social assistance, and transportation are still adding jobs steadily bls.gov bls.gov. However, more interest-sensitive industries have shown strain; for instance, federal government employment declined by a few thousand in early 2025 bls.gov (reflecting, in part, hiring freezes or spending cuts at the federal level). Business leaders report slowing recruitment plans for the months ahead, anticipating weaker demand inc.com. If corporate earnings and sales falter, a rise in layoffs could follow. For now, the picture is of a labor market in late-cycle transition – unemployment remains low and jobs are being added, but the trend is deceleration rather than acceleration. This leaves little cushion if other parts of the economy continue to soften.

Stock Market and Financial Conditions: Volatility on Tariff Fears

Financial markets have been unsettled and volatile during President Trump’s initial months, as investors react to shifting economic conditions and unpredictable policy announcements. In January, equities saw a short-lived uptick amid hopes for business-friendly measures, but sentiment quickly soured as recession risks and trade tensions came to the forefront. By late Q1, the major stock indices had given up their early gains and turned downward, reflecting growing investor anxiety. The trigger was President Trump’s aggressive trade stance: a series of tariff announcements in March spooked the markets, sparking a broad selloff in stocks reuters.com. According to Reuters,