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US economy shrinks 0.3% in first quarter amid tariffs, trade wars
Thursday, May 01, 2025 — 15:49:15 (UTC)
Espoo, Finland, May 1, 2025 – The U.S. economy shrank at an annual rate of 0.3% in the first quarter, according to early Commerce Department estimates, as businesses battle with sweeping tariffs and trade wars causing uncertainty.
It’s the first drop in three years, with growth in January to March slowed by a surge in imports. In the first quarter, U.S. imports surged to the highest levels since the pandemic, with businesses stockpiling inventory and purchasing overseas goods before the full impact of the tariffs.
Against the backdrop of 2.4% growth in the final quarter of 2024, the contraction puts the U.S. on the brink of a technical recession, creating further economic uncertainty for businesses.
During the quarter, the U.S. set a baseline 10% tariff on almost all foreign imports, including from the UK, scaling up the percentage for the European Union (20%), Japan (24%), South Africa (30%) and other countries they feel undermine American economic goals.
Since then, there has been further uncertainty after an initial 145% tariff on imports from China has been altered. The tariffs have already had a significant impact with Chinese e-commerce exports to the US falling by 65%.
Mark McCarthy, Chief Revenue Officer at Basware, commented: "Trade wars and tariff uncertainty introduce volatility into the global economy. For major enterprises, especially those with complex supply chains or international footprints, this creates hesitation around IT spending. CIOs and CFOs may want to delay large IT investments, reassess strategic priorities and scrutinize every dollar of spend.
Despite economic uncertainty, companies are strategically prioritizing investment in mission-critical financial operations that offer minimal implementation risk while delivering measurable, rapid returns. Accounts Payable automation is essential for maintaining healthy supplier relationships during turbulent times when suppliers may be more sensitive to payment timing. Research shows up to 90% of businesses pay suppliers late, but automated solutions can reduce invoice processing from an average of 10 days to under four, ensuring timely payments to suppliers who may be facing their own cash flow challenges due to wider economic pressures.
Additionally, economic turbulence creates fertile ground for fraud, with over 70% of businesses falling victim to invoice or payment fraud annually. AI-powered solutions can now detect suspicious patterns and potential errors before they impact the bottom line, protecting against the rise in vendor impersonation scams and fraudulent activities that typically increase during uncertain times. These solutions also enable fast recovery of incorrect payments, providing immediate hard-dollar savings to offset rising costs in other areas of the business.
Macroeconomic headwinds don't kill IT spending; they shift it. And the organizations who optimize their tech solutions and align their strategic priorities in the areas that create the biggest impact will be the ones that come out on top."
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Source: Company press release. 
Categories: Reports and research
