Trump: this has “NOTHING TO DO WITH TARIFFS”
Donald Trump is trying to deflect blame for the fall in US GDP, and the recent stock market turmoil.
In a post on his Truth Social website, the US president says:
This is Biden’s Stock Market, not Trump’s. I didn’t take over until January 20th. Tariffs will soon start kicking in, and companies are starting to move into the USA in record numbers. Our Country will boom, but we have to get rid of the Biden “Overhang.”
This will take a while, has NOTHING TO DO WITH TARIFFS, only that he left us with bad numbers, but when the boom begins, it will be like no other. BE PATIENT!!!
Trump blames Biden (as expected), says tariffs not to blame and tells Americans to ‘be patient’, after data showed the US economy unexpectedly shrank during the first three months of his presidency pic.twitter.com/lniywl7uik
— Danny Kemp (@dannyctkemp) April 30, 2025
To be clear, though – the fall in US GDP in the last quarter is due to a large increase in imports since the start of the year, which drove the US trade deficit to a record high. That increase has been widely attributed to the new president’s trade war, as US companies have ordered more goods from abroad before tariffs kicked in.
And as for ‘bad numbers’, the US economy grew at a decent 2.4% per year rate in Joe Biden’s final full quarter in the White House.
[Incidentally, economics writer Noah Smith recently wrote a good explanation about how GDP data treats imports, here]
Key events
Closing post
Time to wrap up…
The US economy shrank in the first three months of Donald Trump’s second term as the president sought to roll out an aggressive trade strategy, claiming that sweeping tariffs on the world would strengthen the US economy.
Gross domestic product (GDP), a key measure of overall growth in the US economy, fell by 0.3% in the first quarter of the year, on an annualised basis, down from 2.4% in the last quarter of 2024. The contraction – the first since the start of 2022 – puts the US on the brink of a technical recession, defined by two quarters of negative growth.
The drop in activity comes amid a huge fall in consumer sentiment, which in April dropped 32% to its lowest level since the 1990 recession.
Trump spent much of the first quarter threatening, and fleetingly implementing, sweeping tariffs on Canada and Mexico, and targeting China with higher duties on its exports.
Here’s the full story:
Economists blamed the fall in GDP on a surge of imports in the quarter, which subtracted from growth.
Trump, though, has blamed the “Biden “Overhang”” adding, this has “NOTHING TO DO WITH TARIFFS”.
His trade advisor, Peter Navarro, claimed it was the best negative GDP print he had seen.
Wall Street investors are unimpressed, though, as the S&P 500 share index is down 1%.
The UK’s FTSE 100 index, though, has posted a 13-day winning run.
The US GDP report capped a busy data for economic data, with both France and Germany returning to growth, helping the eurozone to expand by 0.4% in the January-March quarter.
FTSE 100 extends its winning run to 13 days
The UK’s stock market’s winning run has continued today, despite disappointment over the US growth report.
In London, the FTSE 100 share index has closed 31 points higher tonight at 8494 points.
That’s its highest closing level since 2 April, just before Donald Trump announced his new ‘Liberation Day’ tariffs.
It means the index has now risen for 13 days in a row, the longest run of gains since January 2017 when it posted a 14-day winning run.
David Page, head of macro research at AXA Investment Managers, suspects that optimism over Donald Trump’s election win lifted business investment in the last quarter.
Here’s his take on the drop in GDP in Q1:
Greensill administrator to sue Lex Greensill
Simon Goodley
Back in the UK, there’s been a development in the long-running Greensill case – the collapsed finance group on whose behalf a lobbying campaign by former prime minister David Cameron was found to have shown a “significant lack of judgment”.
The administrator of Greensill Capital (UK) has filed a high court claim against six former directors – plus founder Lex Greensill – claiming a “breach of fiduciary duty”.
That basically means they are alleged not to have acted in the company’s best interests.
There are few further details, as the claim documents have yet to be made public on the high court’s electronic system. Meanwhile, Grant Thornton, the administrator of the company, declined to comment – a stance seemingly mirrored by the defendants.
When the Guardian rang Lex Greensill’s mobile phone number and asked to speak to the businessman, a male voice answered and asked: “Who’s this?”
After hearing it was the Guardian calling, the voice replied: “I don’t have anything to say to you”.
The line then went dead.
Despite Peter Navarro’s breezy optimism about the fall in US GDP, and Donald Trump’s attempt to pin the blame on Joe Biden, the big picture is that America’s economy fell behind major rivals in the first quarter of this year.
The 0.3% annualised fall in US GDP is equivalent to a quarter-on-quarter contraction of almost 0.1% – weaker than most countries in the eurozone.
Following today’s growth figures from Europe, here’s what we know.
We don’t yet have Q1 GDP data from Japan, the UK or Canada, so we can’t say how far down the G7 growth league the US has fallen.
The Canadian economy contracted by 0.2% in February, on decreases in mining, quarrying, and oil and gas extraction, as well as transportation and warehousing, Statistics Canada said on Wednesday.
March GDP was most likely up 0.1%, while first quarter GDP was likely up 1.5% on an annualized basis, the agency said in a flash estimate.
Democratic senator Chuck Schumer is urging Donald Trump to fire his economic team and change his plans, following the drop in GDP in the first quarter of 2025.
Posting on X, Schumer says:
Americans who hired Donald Trump for the economy must be ready to fire him now.
Today’s GDP number shows Donald Trump is running America the same way he ran his business—straight into the ground.
This decline in GDP is a blaring warning to everyone that Donald Trump and Congressional Republicans’ failed MAGA experiment is killing our economy.
Donald Trump must admit his failure and reverse course, and immediately fire his economic team.
Americans who hired Donald Trump for the economy must be ready to fire him now.
Today’s GDP number shows Donald Trump is running America the same way he ran his business—straight into the ground.⁰⁰This decline in GDP is a blaring warning to everyone that Donald Trump and…
— Chuck Schumer (@SenSchumer) April 30, 2025
Navarro: Best fall in GDP I’ve ever seen
White House senior trade adviser Peter Navarro has claimed that today’s US GDP report is actually encouraging.
Speaking to CNBC, Navarro declares that the report is “the best negative print I have ever seen in my life.”
Market need to “look beneath the surface”, Navarro continued, citing a 22% increase in domestic investment which he boasts is “off the charts”.
Navarro, one of the architects of the Trump trade policy, then declares that if you strip out inventories and “the negative effects of the surge of imports because of the tariffs” you have 3% growth, adding;
We really like where we’re at now.
Peter Navarro on CNBC reacts to the shrinking GDP number by insisting it’s actually good news because if you strip out the effect of tariffs “you have 3 percent growth. So we really like where we’re at now.” pic.twitter.com/iVQoKy4ijf
— Aaron Rupar (@atrupar) April 30, 2025
Harvard economist Jason Furman also calculated the 3% annual growth rate figure, which he defines as “core GDP”.
Real GDP fell at a 0.3% annual rate in Q1.
The underlying numbers are very extreme–with an enormous increase in imports and inventories.
My preferred measure of “core GDP” a better signal, up at a 3.0% annual rate (see next) pic.twitter.com/oSJ7KBNqsa
— Jason Furman (@jasonfurman) April 30, 2025
Event: 100 days of Trump’s presidency – tonight!
Tonight join Jonathan Freedland, Kim Darroch, Devika Bhat and Leslie Vinjamuri as they discuss Trump’s presidency on his 100th day in office, live at Conway Hall London, and live streamed globally.
Book tickets here or at guardian.live
The sharp slowdown in the US economy in Q1 puts “enormous” pressure on America’s central bank to cut interest rates, argues Professor Costas Milas, of the University of Liverpool’s Management School.
He tells us:
Although the latest GDP reading in the U.S. is not good for Trump’s administration, quite paradoxically it might work for Trump. Trump has repeatedly pressed Fed Chair Jerome Powell and the Fed for interest rate cuts. Although the latest GDP drop has largely to do with Trump’s uncertain policies, it definitely justifies an interest rate cut as early as next week.
This is because the latest GDP drop will create “negative momentum” (the so-called carry over effects) for future GDP readings. Quite frankly, today’s GDP reading will add enormous pressure for the Fed to cut interest rates next week.
Trump has been pushing the Federal Reserve to cut rates, arguing that Fed chair Jerome Powell was acting too slowly.
Photos: Gloomy faces on Wall Street
Almost all of the 30 stocks on the Dow Jones industrial average are in the red in early trading, as the sell-off gathers pace.
The DJIA is now down 706 points, or 1.7%, at 39,821 points, as the GDP report casts a cloud over Wall Street.
Amazon (-3.82%) are the top faller, followed by Nike (-3.8%) and Nvidia (-3.5).
Only Verizon (+1.4%) is bucking the trend, showing its face in the risers column.
Wall Street drops in early trading
Wall Street’s main indexes have opened lower after data showed the world’s largest economy contracted in the first quarter.
The Dow Jones Industrial Average fell 237.2 points, or 0.59%, at the open to 40,290.41, as traders digest warnings that President Donald Trump’s tariff policies are hurting the US economy.
The S&P 500 fell 61.4 points, or 1.10%, at the open to 5,499 points, while the Nasdaq Composite dropped 361.3 points, or 2.07%, to 17,099 points.
