The US economy has shrunk, in its worst performance for three years. On the 101st day of his second presidency, Donald Trump insists his tariffs are not to blame – but the data shows an imports rush played a part. Listen to the latest episode of The World podcast as you scroll.
Wednesday 30 April 2025 14:25, UK
We’ve just had this response from Donald Trump, who has taken to Truth Social.
He puts the blame with Joe Biden, saying it’s “Biden’s stock market, not Trump’s”.
As we’ve been reporting, the first US economic growth figures covering Trump 2.0 have been published, showing the economy shrank at an annualised rate of 0.3% between January and March.
The data showed the main culprit was a surge in imports to beat trade tariffs, which have been on the rise since Trump won the presidential election.
Our Business Live presenter Darren McCaffrey has explained that most economists are now “effectively expecting a recession this year” in the US, adding “that is not good news for Trump”.
There’s been more bad news today about the economy linked to Donald Trump’s tariffs, as we’ve been reporting here.
But what does the fall in US GDP mean elsewhere in the world?
The American figures were released on the back of European Union growth data, which also covered the pre-trade war first quarter.
Eurostat estimates showed a better than expected 0.4% quarterly growth rate – driven largely by Spain, our business and economics reporter James Sillars explains.
The 20 nations sharing the euro currency had been expected to collectively deliver a 0.2% figure, confirming lacklustre output improvements of the past two years.
Stimulus by the new German government and European Central Bank interest rate cuts are widely expected to help in overturning that trend.
Germany, which is exiting two years of recession, recorded preliminary growth of 0.2%.
UK data, due next month, is predicted to show a similar rate.
By James Sillars, business and economics reporter
The first US economic growth figures covering Trump 2.0 are out – and make for extremely grim reading at the White House.
The Commerce Department has reported, in a preliminary reading, that the world’s largest economy contracted during the first three months of the year.
Economists and financial markets had largely expected growth of 0.3%.
But the measure showed that the economy shrank at an annualised rate (a calculation of performance over a 12-month period, as opposed to just one quarter) of 0.3% between January and March.
That was the worst performance for three years and sharply down on the solid 2.4% rate of growth measured over the previous three months.
So far, tariffs having opposite effect to what was intended
The data showed the main culprit was a surge in imports – stockpiling to beat trade tariffs threatened after confirmation that Donald Trump had won a second presidential term.
The US trade deficit – public enemy number one as far as Trump is concerned – has widened sharply since December.
That’s in stark contrast to his central mission of cutting that gap between the value of America’s exports and imports.
The rush to avoid tariffs has beaten several monthly records, with the deficit in goods trade hitting a new high in March.
True impact not yet known
Analysts say that while the headline figure appears to be a disaster for Trump, the impact from the hoarding of imported goods distorts the true picture of US economic health.
More important, many argue, will be how the commencement of the main trade war this month will play out.
There are fears that inflation will rise sharply due to higher import costs being passed on, limiting the US central bank’s ability to cut interest rates for consumers and businesses alike.
All this at a time when stock markets and the dollar are still reeling from the effects of the “Liberation Day” trade salvoes.
Will there be a recession?
The International Monetary Fund recently forecast annual growth of 1.8% for the US this year.
But some economists see a 50/50 chance of a recession ahead.
US futures showed further falls for stock markets on Wall Street at the open.
How Trump responds will be the most eagerly anticipated information for investors moving forward.
US GDP fell by 0.3% in the first quarter of this year, it’s just been announced.
Sky’s Darren McCaffrey has been explaining the fall live on air, speaking to presenter Jayne Secker.
McCaffrey says most economists are now “effectively expecting a recession this year in the United States”.
“That is not good news for Donald Trump,” he adds.
We’ll be bringing you the latest figures about US economic growth very shortly on Sky News.
As we reported earlier (see 12.29 post), economists are predicting a sharp slowdown, largely because of Donald Trump’s tariff policies.
Watch along below.
In this new world of Donald Trump 2.0, famous faces from the Biden era have vanished – including Kamala Harris.
The former vice president lost the 2024 presidential election to Trump.
Perhaps understandably, she’s not sought the limelight much since, particularly once the transition from the Biden government to the Trump one was complete.
But tonight she will be speaking at a gala for Emerge America, an organisation that recruits female Democratic candidates, according to our US colleagues at NBC News.
“We are so excited to have former Vice President @kamalaharris giving the keynote to celebrate 20 years of Emerge and address the first 100 days of the Trump administration,” Emerge America said in a post on X.
The speech marks the organisation’s 20th anniversary.
Tickets range from $25 for virtual attendees and up to $50,000 for gala sponsors.
The last 100 days have seen Donald Trump direct his anger and hostility at various groups, agencies and people.
While some stayed silent in response, there have been organisations standing up to the US president.
Who is standing up to Trump?
Harvard University is suing the Trump administration after it rejected a list of demands from the White House and had £1.6bn of government funding frozen.
It marks the first major hurdle for the Trump administration in its crackdown on “inappropriate” ideologies on campuses.
You can read more about that in the story below.
The Associated Press is another to have stood up to Trump in his first 100 days after a US judge ordered its access to presidential events to be restored.
The White House had blocked the news agency after it refused to adopt the administration’s renaming of the Gulf of Mexico to “Gulf of America”.
Who isn’t standing up to Trump?
Fear among Washington lawyers is said to have never been greater after Trump’s 100 days.
His administration has targeted those who have been involved in investigating Trump, with firms caving to his demands in order to stay in business.
He’s also ramped up his attacks on newspapers and traditional media by attacking those who are critical of him, restricting access and bringing lawsuits.
Trump’s administration also wants to cut the federal funds that support public media in the US.
Another episode of The World with Richard Engel and Yalda Hakim was released this morning.
This week, Yalda and Richard discuss whether there is any rationale behind President Trump’s foreign policy or if he is just winging it.
They analyse the most recent volte-face on his attitude towards Volodymyr Zelenskyy and Vladimir Putin, and the impact on his popularity at home.
They also discuss the status of a possible US-Iran nuclear deal.
To get in touch or to share questions for Richard and Yalda, email theworld@sky.uk – and click here to follow The World wherever you enjoy your podcasts.
Donald Trump is simply “trolling” when he suggests he might run for office for a third term, the White House said this week.
The president has continued to flirt with the prospect of serving until 2033, when he would be 86 years old.
In March, he told our US partner network NBC News that he was “not joking” about potentially seeking a third term, which the American Constitution forbids.
The idea came up on Monday during a White House news briefing reserved for what the administration dubs as “new media”.
Press secretary Karoline Leavitt was asked to play a game where she was supplied with a Trump proposition, and she had to determine whether the president is telling the truth or “trolling”.
Asked about his talk about running in 2028, she said: “Trump trolling, although the hats are flying off the shelves.”
The Trump Organisation has begun selling red hats and T-shirts with “Trump 2028” embroidered in bright white font on the front.
Hats are priced at $50 (£37), while the shirts, which also feature the phrase “Rewrite the Rules”, are priced at $36 (£26).
Trump seemingly debuted his latest piece of apparel – a hat with “Gulf of America” emblazoned on the front – earlier this week.
As we’ve mentioned, we’re expecting some big figures on the US economy this afternoon.
But before those are released, economists have already been predicting a sharp slowdown in American gross domestic product (GDP).
A Reuters survey of economists forecast GDP likely increased at a 0.3% annualised rate last quarter, which would be the slowest pace since the second quarter of 2022.
But the survey was concluded before data on Tuesday showed the goods trade deficit surged to an all-time high in March amid record imports, which prompted economists to sharply downgrade their GDP estimates.
“The trade shock now looms large, overshadowing everything else that the White House has attempted to accomplish,” said Joe Brusuelas, chief economist at RSM US.
“The fact that we’ve gone from trade shock to financial shock to a possible recession in less than 100 days ought to give pause to those who want to continue down this road of tariffs.”
What effect did Trump’s tariffs have?
The problem is the economy has been swamped by a deluge of imported goods by businesses eager to avoid higher costs, underscoring the disruptive nature of Donald Trump’s often chaotic tariff policy.
Economists estimated the trade deficit subtracted as much as 1.9 percentage points from GDP last quarter.
Consumer confidence is near five-year lows and business sentiment has tanked, while airlines have pulled their 2025 financial forecasts, citing uncertainty over spending on nonessential travel because of tariffs, which economists have warned will raise costs for companies and households.
We should know more later today, when the Commerce Department’s advance GDP report comes out.
However, some economists warned against placing too much weight on the GDP number, arguing that an unusually large amount of non-monetary gold had accounted for some of the jump in imports.
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