Let’s get the big news out of the way: The economy shrank by 0.3% during the first quarter of 2025, a mild but not wholly unexpected drop blamed by nearly everyone on President Donald Trump’s tariff hikes. Is that the first step toward a recession, or, as Trump put it, just a result of the “Biden overhang”?

First, let’s just note one big thing: The media can’t help but show its glaring bias against Trump even when it reports boring data, such as the barely negative GDP number.

“Honey, Trump shrunk the economy! And the lying coward is still blaming Biden,” as a particularly crass opinion on USA Today said.

“Everything is fine: Trump’s cabinet shrugs off shrinking economy,” smirked the AFP news service’s sarcastic headline. The story asked: “Contraction? What contraction?”

In case you didn’t get that quote, it was a play on the clueless remark (“Crisis? What Crisis”) supposedly uttered by British Prime Minister James Callaghan, after being asked about his collapsing economy during the disastrous “Winter of Discontent” in 1979.

Then there was Newsweek’s effort: “Trump Loses First Round of Trade War as U.S. Economy Shrinks, China’s Grows.” As any competent economist will tell you, China’s economic data are not reliable. So comparing U.S. data to China’s numbers, is misleading at best.

So let’s repeat. This is a 0.3% drop in GDP, not a collapse. And Trump is no bungling leftist British leader like Callaghan, whose tenure in office was so disastrous it led to Conservative Margaret Thatcher’s record run of nearly 11 years as prime minister.

But more to the point, let’s look at why GDP fell, which is interesting.

Did tariffs play a role? They did, even though they weren’t in effect during the first quarter.

But businesses always prepare for changing circumstances. As it turns out, U.S. and foreign companies anticipated Trump’s promised tariffs on foreign-made goods by front-loading imports during the first quarter.

And boy, did they front-load them. Imports soared at a 41.3% annual rate during the first quarter as businesses brought in all the foreign goods they could, tariff-free. As a matter of calculation, imports subtract from GDP.

So that 41.3% surge in imports reduced GDP by 5%. In short, mere anticipation of the tariffs caused the decline, not the actual tariffs themselves. Add back even half of that 5% hit to GDP, and a very different picture emerges.

And when you look at a more substantive measure of underlying economic demand, such as final sales to domestic purchasers, you see a 3% annual rate of growth, a step up from the fourth quarter’s 2.9% pace.

In short, the bottom isn’t falling out of the economy, though it still remains burdened by the Fed’s string of 11 interest rate hikes from March 2022 through September 2024, when it finally began trimming rates. Fed interest rates remain high today, but the residual effects of Bidenomics and its destructive inflation still haven’t worn off.

To be sure, Trump’s tariffs spooked the stock market, as investors tried to figure out how the new system will affect corporate earnings and the real economy. The bellwether S&P 500 Index of major companies is off about 8% since Trump took the oath on January 20.

But while investment markets are vital, there’s another little-noticed investment boom going on: Companies such as Johnson & Johnson, Apple, Nvidia, OpenAI, Oracle, SoftBank, Taiwan Semiconductor Manufacturing Company, and even the United Arab Emirates, have together pledged more than $2 trillion in new U.S. investment over the next decade.

Just this week, pharmaceutical giant Merck announced a $1 billion plant to make its anti-cancer drug Keytruda. Other foreign drugmakers such as AstraZeneca, Novartis and Roche are also building plants in the U.S. to avoid tariffs.

That’s long-term potential for trillions in added U.S. output and millions of new jobs for Americans.

As our good friend Steve Moore at the Committee to Unleash Prosperity reminds us, “investment (the impetus of long-run real economic growth) soared, up 22% . . . This is the rocket fuel for future growth that America needs. This was the opposite of tepid business investment under Biden.”

So, yes, tariffs have made for a rocky start. For the record, we’re tariff skeptics ourselves. Even so, once tariffs are sorted out and Congress fulfills its pledge to cut taxes, growth will almost certainly return and America’s heartland will again hum with the sound of modern factories. America is resilient.

Until then, Trump will get no breaks from the anti-Trumpmedia. There’s already a steady drumbeat of negativity, with daily predictions of looming recession, just as in his first term. Any mistakes, any weaknesses, always excused under President Joe Biden, will immediately be flung in Trump’s face.

— Written by the I&I Editorial Board