Following a surprise contraction in the U.S. economy in the first quarter of 2025, financial expert Carol Roth joined Chicago’s Morning Answer to assess what the negative GDP number really means and whether Trump’s trade strategy can withstand the mounting pressure from voters and markets alike.
Roth, entrepreneur and author of You Will Own Nothing: Your War with a New Financial World Order and How to Fight Back, argued that the reported economic dip is largely due to a surge in imports as businesses rush to beat anticipated tariff hikes. She said that if the import spike were excluded, the quarter likely would have shown modest growth.
“That’s a positive scenario,” Roth said. “But it’s a one-time buffer. If the fallout from tariffs continues and we see another contraction, that’s a technical recession—no matter how you try to spin it.”
Roth warned that while tariffs can be a useful negotiating tool, the current approach has not been targeted enough. She noted that blanket tariffs are hitting both foreign-based manufacturers and U.S. companies with overseas supply chains, threatening small businesses already stretched thin.
“Instead of being surgical, the policy has been broad,” Roth said. “And small businesses don’t have the balance sheets of Amazon or Tesla. They’re hanging on by a thread after five brutal years.”
The White House maintains that deals with India, Japan, and South Korea are close to being finalized, according to Treasury Secretary Scott Bessant. But Roth emphasized that without immediate relief for small businesses, the administration risks alienating one of its strongest constituencies.
“There are 35 million small businesses in this country,” Roth said. “If this is truly a Main Street-first presidency, then small business owners need a seat at the table—especially as we enter National Small Business Week.”
Roth proposed exemptions for small businesses from some of the incoming tariffs, or at the very least, inclusion in the broader conversation about trade policy. She also called for greater collaboration between Wall Street and Main Street to ensure the policies don’t disproportionately benefit large corporations.
“Every policy that affects the Fortune 500 also affects the corner bakery, the parts supplier, the small manufacturer,” Roth said. “And yet their voice is rarely considered.”
One recent flashpoint in the debate: the administration’s reaction to reports that Amazon might itemize tariff-related costs in customer checkouts. While the White House quickly dismissed the move as a “political stunt,” Roth said pricing transparency would be a good thing.
“Tariffs are taxes. They are either paid by businesses or passed on to consumers,” Roth said. “People should know where their money is going—and if a few Amazon shoppers get a wake-up call in the process, even better.”
Looking ahead, Roth voiced skepticism about Congress’s ability to pass the needed tax relief and spending reforms before a looming summer deadline. While the Trump administration may be able to delay the pain, Roth said, real progress will require lawmakers to act responsibly—something she’s not optimistic about.
“We’ve got a hair-on-fire debt problem,” Roth said. “If we don’t rein in spending and extend tax relief in a meaningful way, all of this could be for nothing.”
She also warned of COVID-style disruptions returning to the economy, albeit under a different banner. With cargo shipments from China reportedly falling and West Coast ports predicting a 35% drop in import volumes over the next two weeks, Roth said supply chain pain is likely to follow.
“We’ve seen this movie before. It’s COVID 2.0,” she said. “Different cast, same plot—and we still haven’t learned the lessons.”
While Roth expressed cautious optimism that China’s decision to lower tariffs on certain U.S. goods might ease tensions, she said it’s clear the world is entering a high-stakes economic standoff. “It’s a game of chicken,” Roth warned. “And I’d rather not be the one who blinks last.”
Roth’s newsletter, which covers these issues in depth, is available for free at carolroth.com/news.