U.S. Economy Grows 3% in Second Quarter, Surpassing Expectations Amid Trade Shakeup
The U.S. economy expanded at a stronger-than-expected pace this spring, growing at an annualized rate of 3% in the second quarter a notable jump from the 2.3% growth rate many economists had forecast.
Driving the unexpected boost were two major forces: a sharp decline in imports and resilient consumer spending. The surge marks a victory for the Trump administration, which has faced criticism that its economic policies including aggressive tariffs and cuts to social programs could be doing more harm than good.
While long-term risks remain, particularly as Trump’s trade and immigration policies continue to reshape the economy, the latest data shows that Gross Domestic Product (GDP) the broadest measure of economic activity is currently growing at a healthy pace.
Earlier this year, GDP growth had been dragged down as companies rushed to import goods ahead of Trump’s tariff hikes, creating a temporary surge in imports. But that trend reversed dramatically in the second quarter, with imports dropping over 30% compared to the previous three months. The shift helped lift the Commerce Department’s GDP estimate into positive territory.
Recent agreements including a new trade framework with the U.K. and a pause in the so-called “Liberation Day” tariffs along with formalized duties on key imports like steel and aluminum, have helped restore some market stability and given businesses clearer expectations moving forward.
However, not all the signs are encouraging. Real final sales to private domestic purchasers, a key indicator that excludes trade and government spending to focus on consumer activity and private investment, rose just 1.2%, down from 1.9% in the prior quarter. That slowdown may suggest the current pace of growth could be difficult to sustain.
Meanwhile, President Trump has continued to put public pressure on Federal Reserve Chair Jerome Powell to cut interest rates, arguing that lower borrowing costs would stimulate housing and consumer markets. “Too Late MUST NOW LOWER THE RATE. No Inflation! Let people buy, and refinance, their homes!” Trump posted on Truth Social.
Despite the political push, the Fed is expected to hold short-term interest rates steady at 4.25–4.5% following its July meeting. Economists say the latest GDP figures may strengthen the central bank’s case for keeping rates unchanged in the near term, especially as it waits for clearer signals on how Trump’s evolving policy landscape is influencing prices and the broader labor market.