First-quarter GDP tanked because there was so much panic-buying from other countries ahead of Trump’s tariffs rollout

• US importers in a hurry This spring at an unprecedented speed, carrying the goods before consumers have the opportunity to buy. That became the first-quarter estimate of the GDP negatively and sent markets that panic-but it didn't require a sign of weakness, economists said.

The US economy returned to the first three months of the year as the Gross Domestic Product contracted at an annual rate of 0.3%.

The culprit? The tariffs were announced by President Donald Trump, that the timing led to a career to stop it in companies, dragging the GDP number.

But this is not a sign of economic damage – yet. Instead, the negative number shows a quirk about how the gross domestic product, the sum of all economic activities in the country, is calculated.

“We rarely advise clients to ignore economic reports, but the Advance Q1 GDP report is close to the fall in that category,” Capital Economics wrote in a research proposal on Tuesday.

The GDP is calculated by increasing business investment, spending and exporting of government and consumer, and reducing imports. In the long run, reducing imports has no effect, economic capital explained. Negative imports appear as a positive number when a business puts the goods in its warehouse or a buyer bought it on the shelf.

But this is where timing is important. In the early days of Trump's tariff announcements, companies were in a hurry to get a huge amount of goods in the US, stock items before consumers had the opportunity to buy them. That drives the GDP number negatively.

Many companies were in the face of their shipments even before Trump formally received, which caused the US trade shortage in December 2024. GM's accelerated shipments from Mexico; Food imports were pulled into more Italy Parmigiano-Reggiano than normal, and merchants stocked with iron, Reuters reported.

Trump quickly announced tariffs on steel and aluminum, threatened, then postponed, tariffs in Mexico and Canada, and, with his announcement “Day Day”, set a 30-day end date for tariffs with most American trade partners. He eventually postponed most of those taxes.

“Imports of consumer goods are running 55% higher than a year ago, while retail data shows the sales of those goods are not running anywhere near that speed,” said capital economics.

The upshot is that, while the economic retrieval from January to March seems to be noticeable, it doesn't say much about what's really happening.

“We are in the uninitiated water,” Bill Adams, chief economist for Comerica Bank, said on a note. “Due to the major economic change in April, the GDP's first quarter's GDP reports less than before about the economic trajectory.”

Aside from trade, the proposals of consumer spending and business investment are relatively healthy, describing a slowing economy but not crashing. A 5% collapse in federal expenditure, driven by the Government Department of Efficiency (DOGE), sent less to GDP than otherwise, but sales to domestic consumers increased to a healthy 2.3% rate while stronger-than-expected business investment further pushed the figure.

But with the tariffs that are now in place and set to rise, a great deal with spring activity has now evaporated. Until mid -April, transmissions from China were about 30% lower than last year, according to the supply chain platform Project44.

“Within two weeks, the arrival will be lowered by 35%, as it is essentially all transmissions outside China for major retailers and manufacturers have stopped, and the cargo that appears in Southeast Asia's locations are softer than normal,” said Gene Seraoka, Executive Director of the Los Angeles port, last week.

This means that, while the economy of this quarter looks worse than the paper than the fact, the opposite is likely to be true in the coming months.

“[T]US economy is not close to retreating in the first quarter, “PNC's chief economist Gus Faucher said in an email to Fate. “But the consumer and business sentiment have been rapidly falling since President Trump's announcement of a major increase in tariffs, and inflation is set to take more as tariff increases work at prices.”

“The higher the tariffs are, the longer they stay in the area, and the greater the uncertainty around them, the greater the likelihood of retreating,” he said.

This story was originally featured on Fortune.com