US GDP growth rebounds in second quarter on tariff turbulence

30/07/2025 21:00
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KPL US economic growth bounced back in the second quarter, government data showed Wednesday, as analysts warned of distortions due to shifting trade flows over President Donald Trump's tariffs.

(KPL/AFP) US economic growth bounced back in the second quarter, government data showed Wednesday, as analysts warned of distortions due to shifting trade flows over President Donald Trump's tariffs.

The world's biggest economy expanded by an annual rate of 3.0 per cent in the April to June period, beating analysts' expectations and reversing a 0.5 per cent decline seen in the first three months of the year, according to the Department of Commerce.

A consensus forecast by Briefing.com had expected a 2.5 per cent rate.

At the start of the year, businesses rushed to stock up on products in an effort to avoid the worst of Trump's threatened tariff hikes -- but the build-up is now unwinding.

"The increase in real GDP in the second quarter primarily reflected a decrease in imports, which are a subtraction in the calculation of GDP," said the Commerce Department.

The uptick also reflected an increase in consumer spending, the report said.

The imports surge ahead of tariff hikes in the first quarter this year led to the largest drag on GDP growth from net exports on record, analysts at Goldman Sachs noted recently.

Analysts widely expected a bounce back as imports cooled but said that this might not be sustainable.

They warned that Trump's incoming wave of tariff hikes could cause an uptick in inflation, which would in turn erode households' spending power. This stands to weigh on consumption patterns.

KPL

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