President Donald Trump on Wednesday acknowledged that American consumers may face higher prices and fewer product choices as tariffs ripple through the economy, but insisted that the trade war will ultimately benefit the United States. "Maybe the children will have two dolls instead of 30 dolls," Trump told reporters. "And maybe the two dolls will cost a couple of bucks more."
The president's comments came as the Commerce Department reported that U.S. gross domestic product shrank 0.3% in the first quarter, the economy's first contraction in three years. The decline was attributed in part to a surge in imports, as businesses raced to stock up ahead of sweeping tariffs that now cover a wide range of goods, including toys, steel, and electronics.
Retail industry leaders are warning of significant disruptions ahead of the 2025 holiday season. Toy Association CEO Greg Ahearn said the sector is confronting "a frozen supply chain that is putting Christmas at risk." He added, "If we don't start production soon, there's a high probability of a toy shortage this holiday season."
Executives from Walmart, Target, and Home Depot reportedly met with Trump last week to express concern over supply chain delays, price hikes, and the prospect of empty shelves. Walmart CEO Doug McMillon remained cautiously optimistic. "There will be a Christmas, and people will celebrate Christmas, and they will buy items, and we will sell them those items," he said. "If there are higher price points, and you want to rethink its quantity, maybe that makes sense."
Trump, who marked his 100th day in office this week, claimed the GDP dip was a temporary effect caused by front-loaded imports. "This is Biden's Stock Market, not Trump's," he posted on social media. "Tariffs will soon start kicking in, and companies are starting to move into the USA in record numbers."
Democrats countered that Trump's erratic trade policies are already undermining business confidence. "We've only seen the beginning of the dangerous impacts from Trump's random policies," said Rep. Suzan DelBene (D., Wash.). "A strong economy needs stability and certainty. We haven't seen that."
Commerce Secretary Howard Lutnick told the Cabinet that recent investment by Taiwan Semiconductor Manufacturing Co. in Arizona's chip plants demonstrated the benefits of tariffs. Trump credited his trade policies for the expansion, despite the project's funding being tied to the CHIPS and Science Act, passed under President Biden.
"They're building because of the tariffs," Trump said.
Heather Boushey, a former member of the White House Council of Economic Advisers under Biden, blamed the economic slowdown on Trump's early actions. "In just 100 days, President Trump has taken the U.S. economy from strong, stable growth to negative GDP," she said.
