President Donald Trump has now overseen the first shrinking of the U.S. economy in three years. The gross domestic product contracted by 0.2% because of a surge in imports as U.S. companies  hurried to bring in foreign goods before the president imposed massive import taxes.

The January-March drop in the nation’s output of goods and services reversed a 2.4% gain in the fourth quarter of 2024. The Commerce Department also says that consumer spending also slowed sharply.

And the Labor Department says more Americans filed for jobless aid last week, with applications jumping by 14,000 higher than the forecast. The total number of Americans receiving unemployment benefits increased to 1.92 million.

What’s Next With Trump’s Tariffs After a Court Blocks Them?

The  New York-based U.S. Court of International Trade court blocked the tariffs Trump slapped last month on almost all U.S. trading partners and also the levies he imposed before that on China, Mexico. and Canada.

The Trump administration says they’ll go to the Supreme Court if necessary as they appeal the ruling.

Wendy Cutler, a former U.S. trade official who is now vice president at the Asia Society Policy Institute, says the court’s decision “throws the president’s trade policy into turmoil.”

“Partners negotiating hard during the 90-day day tariff pause period may be tempted to hold off making further concessions to the U.S. until there is more legal clarity,” she said.

Likewise, companies will have to reassess the way they run their supply chains, perhaps speeding up shipments to the United States to offset the risk that the tariffs will be reinstated on appeal.

For now, the trade court’s ruling “destroys the Trump administration’s rationale for using federal emergency powers to impose tariffs, which oversteps congressional authority and contravenes any notion of due process,” said Eswar Prasad, professor of trade policy at Cornell University. “The ruling makes it clear that the broad tariffs imposed unilaterally by Trump represent an overreach of executive power.”