U.S. economy shows growth in second quarter, but concerns over tariffs and inflation remain
TOI World Desk | Sep 02, 2025, 01:46 IST
The U.S. economy saw a 3.3% growth in the second quarter of 2025, following a 0.5% decline in the first. While the growth was driven by a significant drop in imports, economists are concerned about the long-term effects of Trump’s tariffs, which raise prices and fuel inflation. The U.S. Court of International Trade has ruled against Trump's tariff powers, highlighting the political instability.
Amidst the tariff tension, the U.S. economy has seen a growth of 3.3% from April to June, the second quarter. Such growth may seem encouraging, especially after the drop in GDP in the previous months, January to March, the first quarter. This drop in growth of 0.5% is attributed to the hike in imports surging before the implementation of Trump tariffs. The Trump tariff hurts the trade and triggers inflation while making the economy less efficient.
The growth in the second quarter was the effect of a huge drop in imports and a slow increase in consumer spending. Imports fell by almost 30%, which is the major driver for the increase in growth. The economy did face an enormous dip in private investment by 13.8%. The government spending fell by 4.7%, which is very concerning. This growth is misleading, as it is not backed by actual production but rather by a decrease in imports.
The long-term effects seem concerning, according to the renowned economist. Tariffs raise prices for U.S. businesses and consumers. It hurts trade and increases inflation. The Trump supporters believe that this would save the U.S. economy, but the irony is that the U.S. Court of International Trade has ruled that Trump does not hold the constitutional right to impose huge tariffs without Congress approval. This has sparked a bad image of the unstable political decorum in the U.S. government.
The growth in the second quarter was the effect of a huge drop in imports and a slow increase in consumer spending. Imports fell by almost 30%, which is the major driver for the increase in growth. The economy did face an enormous dip in private investment by 13.8%. The government spending fell by 4.7%, which is very concerning. This growth is misleading, as it is not backed by actual production but rather by a decrease in imports.
The long-term effects seem concerning, according to the renowned economist. Tariffs raise prices for U.S. businesses and consumers. It hurts trade and increases inflation. The Trump supporters believe that this would save the U.S. economy, but the irony is that the U.S. Court of International Trade has ruled that Trump does not hold the constitutional right to impose huge tariffs without Congress approval. This has sparked a bad image of the unstable political decorum in the U.S. government.