Decline in output and new orders in April allied with rising uncertainty is prompting layoffs, survey finds

President acknowledged his tariff war with China could lead to a toy shortage and costlier productsDonald Trump on Wednesday acknowledged that his tariffs could result in fewer and costlier products in the United States, saying American kids might have two dolls instead of 30 dolls", but he insisted China will suffer more from his trade war.The US president has tried to reassure a nervous country that his tariffs will not provoke a recession, after a new government report showed the US economy shrank during the first three months of the year. Continue reading...

Pittsburgh residents, workers and business owners react to the increasingly fraught trading reality now upending supply chains and hitting pricesIn a lot of ways it feels like Covid 2.0. So many things are getting disrupted so quickly." Like so many businesses across Donald Trump's America, Matt Katase's craft brewery, Brew Gentlemen, is having to contend with a bafflingly uncertain trading environment.The brewery's chief operating officer, Alaina Webber, says: For the first time, as a company in operation going on 15 years, we've started to get explicit emails that say: On this existing order, you are now going to see a 30%, then to a 130% increase.'" Continue reading...

The deal with Javier Milei shows how America-first dealmaking is bending global finance to serve authoritarian and extractive endsIt is famed for hard-nosed bargaining with crisis-hit countries, so why did the International Monetary Fund throw a $20bn lifeline to the serial defaulter Argentina - despite alarm on its board? The answer is that the country's rightwing leader, Javier Milei, is Donald Trump's favourite president". Amid unease over handing a third of the IMF's global lending to its largest debtor, the deal passed with $12bn upfront. The IMF has long been intellectually compromised - promoting stability while enforcing neoliberal orthodoxy. Under Mr Trump, it is ethically compromised too.Mr Milei's bailout marks the second Trump-era rescue for Argentina. In 2018, the fund handed Buenos Aires a record $57bn - but cut it off when its then president, Mauricio Macri, a Trump family friend, was not re-elected. That deal now looks nakedly political. With the US holding an effective board veto, the fund's independence was always fragile. It's now completely subordinated. A US takeover of the IMF threatens deeper instability than any Argentinian default.Do you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. Continue reading...

US on brink of Trumpcession' after jump in imports weighs down GDP... US president blames predecessor

Initial training to be offered in north-west England, as report shows disparities in access to the subjectThe Bank of England is backing a drive to put more economics teachers into state schools, as a report has revealed young people from disadvantaged backgrounds are the least likely to study the subject.Targeting students in the north-west of England in its first year, the scheme will aim to overcome huge shortages of teachers across the state sector with the skills to teach economics. Continue reading...

Temu and Shein among fast-fashion sites affected by drop in first three months of this year but sales in rise to EUExports to the US from Chinese online shops such as Temu and Shein have plunged in the face of Donald Trump's trade war, as shipping from China to the EU has increased.Official Chinese data showed its total e-commerce shipping to the US dropped 65% by volume in the first three months of the year, but rose by 28% in Europe. Continue reading...

Fellow carmakers Stellantis and Mercedes withdraw financial guidance for year over impact of trade warThe British sportscar maker Aston Martin is limiting exports to the US in the face of Donald Trump's tariffs, while its counterparts Stellantis and Mercedes withdrew their financial guidance for the year, blaming the uncertainty around changing US policy on import levies.Aston Martin, known for producing the cars driven by James Bond in the spy films, said it was currently limiting imports to the US while leveraging the stock held by our US dealers". Continue reading...

Index of activity drops to lowest reading since December 2023 as a result of sharp changes' in international tradingChina's factory activity slowed in April, with Beijing blaming sharp changes" in the global economy as it fights a widening trade war with the US.Punishing tariffs introduced by Donald Trump that reached 145% on many Chinese products came into force in April, and Beijing responded with 125% duties on imports from the US. Chinese exports soared more than 12% last month as businesses rushed to get ahead of the punishing tariffs. Continue reading...

Plans to protect UK from extreme weather are inadequate, Climate Change Committee says in scathing assessmentLabour is putting people, the economy and the environment in increasing peril by failing to act on the effects of the climate crisis, the UK's climate watchdog has said.Flooding, droughts and heatwaves are all increasing in severity due to climate breakdown, but current plans to protect people, land and infrastructure against extreme weather have been judged inadequate in a scathing assessment of the UK's preparedness. Continue reading...

US president will curb some duties on foreign parts in domestically manufactured cars, administration saysDonald Trump unveiled plans to water down his sweeping tariffs for US carmakers on Tuesday by curbing some duties on foreign cars and parts, granting a reprieve to an industry that warned his strategy would increase costs for American manufacturers by tens of billions of dollars.Carmakers subject to a 25% tariff on imports will not be subject to other levies Trump has imposed, for example, on steel and aluminum. US automakers will also be allowed to apply for tariff relief on a proportion of the costs imposed for imported parts, although that relief will be phased out over the next two years. Continue reading...

Rolling coverage of the latest economic and financial news

Trussell report finds that higher levels of poverty mean Britain is losing out on 38bn a year of potential outputKeir Starmer has been warned that Labour's tough stance on benefits is costing Britain's economy billions of pounds each year while adding to the pressure on public services by pushing more people into poverty.With the government under fire over its planned benefit cuts, the anti-poverty charity Trussell said that failing to tackle hunger and hardship would have severe human costs and cause damage to the wider economy and public finances. Continue reading...

Rolling coverage of the latest economic and financial newsBack in Beijing, China's foreign ministry has said President Xi Jinping had not spoken to Donald Trump.The ministry also denied that the two administrations are in talks to strike a tariff deal, which contradicts a claim from Trump last week.As far as I know, the two heads of state have not called each other recently,I would like to reiterate that China and the U.S. have not conducted consultations or negotiations on the tariffs issue. Continue reading...

Exclusive: Countries are struggling to manage expensive loans, with much of debt transacted through LondonDiplomats from eight southern and east African countries have signed a letter calling on the UK government to support a private member's bill that aims to speed up debt restructurings, after economic crises meant countries were unable to pay back loans.Poor countries' economies have been hit by a series of global events in recent years, including the coronavirus pandemic, which reduced growth; the Russian invasion of Ukraine, which sent inflation soaring; and raised US interest rates, which have pushed up the cost of international loans to often unaffordable levels. Continue reading...

Number of vessels scheduled to arrive at Port of Los Angeles next week is down by almost a third year on year

EY Item Club predicts GDP of only 0.8% this year as Ipsos poll shows three-quarters of Britons expect economy to get worseThe UK economy is set to slow sharply for the next two years as Donald Trump's global tariff war weighs on consumer spending and business investment, a study by a leading forecaster has predicted.The findings by EY Item Club, which is sponsored by the big four accountancy firm EY, come as a separate survey reported that confidence in Britain's economy has fallen to the lowest level on record. Continue reading...

Trump's tariffs will make it tougher for emerging economies to service loans but debt relief has fallen off the political agendaPope Francis's vast funeral in Rome on Saturday featured a certain amount of politicking amid the splendour, against the magnificent backdrop of St Peter's Basilica.If the meeting between Volodymyr Zelenskyy and Donald Trump results in progress towards a less inequitable peace than the one currently envisaged by the US, perhaps that will be fitting, given the late pontiff's consistent calls for an end to war. Continue reading...

As the Australian economy turns, the Coalition finds itself out of step with the electorate

Number of visitors sinks 11.6% in March as deportations and tariffs make US a less appealing destinationEvery summer, Cheryl travels to Iowa, from her home in St Kitts. She rents a three-bedroom house for her and her US-based adult children. She usually rents a car, too, and the family go out for dinners and explore local attractions. Cheryl typically spends $10,000 on the trip.Not this year. Continue reading...

Experts warn of slowing economy after score based on Americans' financial outlooks fell by 32% since JanuaryUS consumer sentiment plummeted in April after Donald Trump's trade war threw the global economy into chaos, according to a new report.The index of consumer sentiment, a score based on a monthly survey asking Americans about their financial outlooks, fell by 32% since January - the largest drop since the 1990 recession, according to the University of Michigan's Institute for Social Research. Continue reading...

Few policymakers mention US president by name, but his tariffs dominate IMF-World Bank meetingKristalina Georgieva's favourite film, the International Monetary Fund boss told the audience at a packed panel event in Washington on Thursday, is Tom Hanks's cold war romp Bridge of Spies.In one of the stranger digressions in a frequently strange week, Georgieva recalled the moment when Hanks's character, a US lawyer, tells the Soviet spy he has been appointed to defend that he will probably be executed. You don't seem alarmed," Hanks says to him; to which the spy - played by Mark Rylance - replies, Would it help?" Continue reading...

Chancellor discusses prosperity deal' with Treasury secretary Scott Bessent but US calls for reduced tariffs on car imports to UK

Beijing will strengthen bottom-line thinking' as reports say it could drop tariffs on some US products

To solve three conflicts simultaneously would be a daunting task for anyone, but it is especially so for a man entirely new to diplomacy

The president aims to boost US manufacturing, but insiders warn tariffs will increase costs and destroy businessesAcross the US, many executives leading apparel and textiles businesses are scratching their heads.Tariffs of 145% on goods from China, and tariffs of 10% on goods from much of the rest of the world, have been billed by the White House as a once-in-a-generation efffort to boost domestic manufacturing. Continue reading...

Andrew Bailey says UK not close to recession but he would be encouraged' if trade deal with US were agreedThe Bank of England's governor, Andrew Bailey, has said the UK economy faces a growth shock" as a result of Donald Trump's trade policies.Speaking on the sidelines of the International Monetary Fund (IMF) meetings in Washington, Bailey said that while he did not think the UK was close to recession at the moment, we are certainly quite focused on the growth shock". Continue reading...

President's comments follow Chinese government's denial of baseless' claim that Washington was close to dealThe US and China held talks on Thursday to help resolve the trade war between the world's two largest economies, Donald Trump said.We may reveal it later, but they had meetings this morning, and we've been meeting with China," the US president told reporters at the White House. Continue reading...

The UK is being dragged in opposing directions by international forces in its quest for growthRiding two horses is hard enough, but diplomats are joking in private that Keir Starmer and Rachel Reeves are trying to ride three.At the International Monetary Fund summit in Washington this week, Reeves sought to position the UK as a beacon of free trade that is open to business with the EU, US and China. Continue reading...

Unilever and Procter & Gamble indicate more increases could be on way as Trump policy affects ingredient costsThe companies that make leading brands including Magnum ice-creams, Nescafe coffee and Ariel washing liquid have indicated that more price increases could be on the way as ingredient costs rise amid Donald Trump's tariff war.Procter & Gamble, whose products include Pampers nappies and Oral-B toothpaste as well as Ariel, said new US tariffs could cost it up to $1.5bn (1.1bn) a year, forcing it to put up prices again on top of a 1% year-on-year rise in the first three months of 2025. Prices of the group's beauty products, which include Olay and Pantene, rose 3% in the quarter. Continue reading...

Kristalina Georgieva calls for trade policy settlement and says tariff wars have spiked uncertainty off the charts'IMF managing director Kristalina Georgieva has urged the US to strike trade deals urgently to limit the damage to the global economy from Donald Trump's tariff policies.Speaking at a press conference at the IMF's spring meetings in Washington, Georgieva declined to criticise the US administration directly; but warned that what she called major trade policy shifts" had spiked uncertainty off the charts". Continue reading...

Exclusive: plan to let firms sidestep environmental laws by paying into nature levy would add cost and delay, says letter to MPsLeading economists, former government advisers and ecologists are calling for a key section of the government's planning bill to be changed because it creates a licence to kill nature".Sir Partha Dasgupta, professor emeritus of economics at the University of Cambridge, ecology professor Sir John Lawton and Dr Tom Tew, a former chief scientist of Natural England, are among the signatories to a letter to MPs that warns them to ignore government slogans and false rhetoric about nature and wildlife being a block to growth. Continue reading...

In today's newsletter: The chancellor faces a pivotal moment in the US as she navigates high-stakes negotiations with the Trump administrationGood morning. I'm Annie Kelly, I'll be bringing you First Edition alongside Archie for the next few weeks.It's probably fair to say the annual spring meeting of the International Monetary Fund (IMF) has not traditionally been an event high on drama. Not so this year, as Rachel Reeves and her fellow finance ministers from around the globe have been blown into Washington DC on the chilly winds of global economic chaos caused by Donald Trump's America First" economic policies, pithily described in a recent Guardian leader as part oligarchic enrichment scheme, part mobster shakedown".Ukraine | At least nine people have been killed and more than 60 wounded in a massive" missile attack on Kyiv, according to Ukraine's state emergency service. It is among the deadliest attacks on the capital of the three-year war.Labour | Keir Starmer is under pressure from more than 60 Labour MPs to allow thousands of young Europeans to live and work in the UK, a move seen as key to unlocking a more ambitious trade reset with Brussels.Health | Adults with severe peanut allergies can be desensitised by daily exposure, according to the first clinical trial of its kind. After being given steadily increasing doses of peanut flour over a period of months, two-thirds of the trial participants were able to eat the equivalent of five peanuts without reacting.NHS | NHS staff are so tired they are dying in car crashes and posing a major threat to patients, the service's safety watchdog will warn on Thursday. Fatigue among frontline personnel causing them to make mistakes is a significant" risk to patients, according to the Health Services Safety Investigation Body (HSSIB).Music | Oasis fans have collectively lost more than 2m to scams since tickets for its reunion tour went on sale last year, a major bank has estimated. Lloyds Banking Group based the calculation on the volume of fraud reports made by its own customers. Oasis fans make up more than half (56%) of all reported concert ticket scams so far this year, losing 436 on average. Continue reading...

Expectations that the Fed will cut short-term interest rates and falling consumer confidence could indicate what is aheadImagine you are sailing a ship through dense fog, looking out for land. Your lookout spots species of birds typically found offshore. It now seems likely that you are approaching land, but it is impossible to know for sure until you see the coastline. If a US recession is land, the birds" are already swooping into view. But these sightings offer no guarantees of what lies ahead, only probabilities.An inverted yield curve, when the long-term interest rate falls to or below the short-term rate, is commonly considered to be a predictor of recession. The 10-year bond rate did fall below the three-month Treasury rate in March, although the two are now at about the same level. In any case, the yield curve does not actually tell us much. It simply reflects financial market expectations that the US Federal Reserve might cut short-term interest rates in the future, which in turn reflects expectations that economic activity might falter. Continue reading...

Chancellor says UK is not going to rush a deal' and rejects new US demands on agricultural products

Chancellor reviewing rule that lets foreign retailers such as Amazon and Shein pay no duty on items costing under 135

With Rachel Reeves in the US, some clarity is needed: the global economy has been mismanaged and the Federal Reserve does deserve criticism Continue reading...

Gloomy business surveys for UK, Europe and US show tariffs starting to take their toll but stocks, dollar rally on hopes of US-China trade deal

Virgin Atlantic founder says erratic' decisions from US president have been awful for everyone'Sir Richard Branson has attacked Donald Trump's policies as doing so much damage" to the world, adding that he did not believe the US president's actions were backed by most Americans.The Virgin Atlantic founder warned that the erratic and unpredictable" actions of the White House were undermining business, although he singled out Trump's policy on Ukraine as the one that should worry the world the most". Continue reading...

Chancellor may be forced to raise taxes or announce deeper public spending cuts in autumn budget, economists say

US president says tariffs on imported goods will come down from 145% rate but insists we're doing fine with China'Donald Trump said during a White House news conference that high tariffs on goods from China will come down substantially, but it won't be zero".Trump's remarks were in response to earlier comments on Tuesday by treasury secretary Scott Bessent, who said that the high tariffs were unsustainable and that he expects a de-escalation" in the trade war between the world's two largest economies. Continue reading...

UK officials say text is agreed on deal to cut president's tariffs on British steel, aluminium and carsRachel Reeves was due in Washington on Tuesday evening for what could be a pivotal week for a proposed US-UK trade deal.Officials say an agreement is ready to sign but may have to be ripped up at the last minute should the US president impose tariffs on pharmaceuticals. Continue reading...

The US president's economic agenda collides with fragile financial systems, triggering market fears, investor flight and developing nation chaosWake up! When the most sober of global institutions, the International Monetary Fund, abandons its usual technocratic calm to sound the alarm on the political roots of global financial instability, it's time to pay attention. The IMF is warning of anon-negligible risk of a $1tn hit to global output, as Donald Trump'serratic America first" agenda - part oligarchic enrichment scheme, part mobster shakedown - collides with a perfect storm of global financial vulnerabilities.Such a shock would be equivalent to a third of that experienced in the 2008 crisis. But it would be felt in a much more fragile and politically charged environment. This time, the crisis stems not just frommarkets but from the politics at the heart of the dollar system. The IMF's latest Global Financial Stability Report sees the danger in Mr Trump's trade policies, especially his liberation day" announcements, whichhave pushed up America's effective tariff rate tothe highest in over 100 years. Continue reading...

Bosses from automotive, manufacturing and energy warned MPs about effect of Trump tariffsBritain's manufacturers will start cutting jobs within weeks" unless the government can strike a deal to safeguard the UK economy from Donald Trump's trade war, industry leaders have told MPs.Senior executives from the UK's automotive, manufacturing and energy sectors warned a committee of MPs to expect job losses this summer if the US moves ahead with a swathe of global trade tariffs set out by Trump earlier this month. Continue reading...

Jerome Powell is a soft target for the president amid economic instability. But getting rid of him would only invite more chaosUS stock markets, Treasury bonds and the dollar itself are sliding amid the tariff turmoil and Donald Trump needs a soft target. It was probably only a matter of time before he intensified his attacks on Jerome Powell, chair of the US Federal Reserve. It is an easy narrative to blame the dull central banker with orthodox worries about anchoring inflation expectations. Nor is Powell able to engage in tit-for-tat soundbites. Unlike Trump, he must measure the impact on markets of his every word.The open question is how far Trump intends to push things. Monday's reaction in financial markets was strong because it seemed for the first time that the president could be serious about removal. Powell's termination cannot come fast enough!" declared Trump, which was several notches beyond his usual whine about urging the Fed to hurry up with cuts in interest rates. Continue reading...

Growth forecasts for most advanced countries have been cut, as IMF warns that trade tensions will hurt economic activity

The International Monetary Fund, a global financial body, said the long-term impact of Trump's tariffs would be negative for the global economy. Pierre-Olivier Gourinchas, the IMF's chief economist, also said the organisation revised down growth for the UK partly due to the impact of the tariffs but also domestic factors in the UK economy

World body says sharp repricing of risks' possible amid growing concern over role of nonbank' lenders

Spanish PM says industrial and technological plan' will ensure country commits to spending 2% of GDP on defenceSpain has announced a 10.5bn investment plan to ensure it will reach its long-delayed Nato commitment of spending 2% of its GDP on defence this year, saying it has become obvious only Europe will know how to protect Europe" from now on.The country - which lags well behind other western nations by dedicating about 1.3% of its GDP to defence spending - is one of the Nato members that has been pressured by the Trump administration to increase its spending, and had previously committed to hitting the 2% threshold by 2029. Continue reading...

WTTC says 5.3% decline in tourist spend suggests policies such as increased air passenger duty have had impactThe government has been accused of sabotaging" the UK's tourism industry, after figures showed international visitors spent more than 2bn less last year than they did before the pandemic.The World Travel and Tourism Council (WTTC) - which found in a new study that people visiting the UK spent 40.3bn in 2024, down 5.3% on 2019 - said that the government has made deliberate policy choices" that had created barriers to travel". Continue reading...