In February 2025, the U.S. economy expanded at a 2.3% annual rate in the fourth quarter of 2024, supported by robust consumer spending. However, this growth was tempered by declines in business investments and inventories. Inflationary pressures also rose, with the Personal Consumption Expenditures (PCE) index climbing to 2.4%, surpassing the Federal Reserve's 2% target.

Simultaneously, President Donald Trump announced plans to impose tariffs on imports from Mexico and Canada, while doubling existing tariffs on China from 10% to 20%. These measures aim to address issues like drug trafficking but have raised concerns about potential economic repercussions. Analysts warn that such tariffs could significantly impact the U.S. economy, potentially costing consumers between $120 billion to $225 billion annually and increasing inflation.

Financial markets reacted negatively to these developments, with the S&P 500 index falling 1.6%. The technology sector was particularly affected, with major drops in stock prices for companies like Nvidia, which saw an 8.5% decline despite a positive earnings report. Concerns about the economic impact of tariffs have also led to nervousness among U.S. households, posing a risk to consumer spending and economic growth.

In response to the proposed tariffs, Canada's Prime Minister Justin Trudeau and Mexico's President Claudia Sheinbaum have expressed hopes for negotiations or prepared retaliatory measures. The situation remains dynamic, with potential implications for international trade relations and the broader global economy.