The United States economy contracted by 0.3% in the first quarter of 2025, according to the Commerce Department, the first quarter of decline since 2022. The decline in gross domestic product (GDP) is due to a large surge in imports despite other parts of the economy slowing down, all while inflation remains high.

Economists expected the economy to grow 0.4% in the first three months of the year, according to NBC News, after seeing 2.4% growth in the final quarter of 2024. The data covers the months right before U.S. President Donald Trump announced reciprocal tariffs on dozens of other countries on April 2. While country-specific reciprocal tariffs have been delayed until July 8, the looming threat places the United States in an uncomfortable position with former trade allies. With tariffs on automobiles, steel and non-USMCA compliant goods, various supply chains are already feeling pressure from the tariffs.

While the actuality of many of the proposed tariffs is unclear, shipments to West Coast ports are dropping all while prices are steadily increasing, signifying that the U.S. is already showing signs of strain. “A period of stagnation now likely lies ahead if the current set of tariffs is maintained,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics said according to NBC News. “With recession the most likely outcome if the additional reciprocal tariffs are imposed in full in July.”

The job market slowed a bit in April as well, with the unemployment rate holding steady at 4.2%. Nonfarm payrolls increased by 177,000 jobs last month according to Reuters, reaching roughly 100,000 new jobs needed each month to keep up with growth of the working-age population. Tariffs have placed a strain on manufacturing sectors, with less job gains seen in the field.

“This is good employment data which suggests that the economy remains strong,” said Melissa Brown, managing director of investment decision research at Simcorp, per Reuters. “We could see these numbers go down as the impact of tariffs really starts to make its way through the economy, but it’s not there yet.”

The ongoing U.S.-China trade war is also straining the economy, but possible negotiations on the horizon could cool tensions. Officials in Beijing said they are “evaluating” an invitation to hold talks over 145% tariff placed on Chinese goods, according to Reuters.

China is one of the United States’s major trade allies with $438.9 billion in imports into the U.S. from China in 2024, so a strained relationship could send ripples across international economies. Total imports to the United States during the second half of 2025 are expected to fall 20%, according to CNN Business, with imports from China expected to fall 75% to 80%.

According to FCIB Credit and Collections Survey, 68% of credit managers with customers in the United States offer 1–30 day terms, followed by 31-60 day terms (23%) and 61-90 day terms (9%). On average, customers are 16 days beyond terms, with survey respondents agreeing that payment delays remain largely the same. Delays are attributed to billing disputes (61%), customer payment policy (46%) and inability to pay (29%). “Customer communication is important,” one respondent wrote. Another advised other credit managers to “watch payment trends with other suppliers.”