Economy

Seated before a pile of rough diamonds laid out on a faded velvet tray, Kalpesh Mangukiya said his cutting and polishing business in the Indian city of Surat was struggling even before Donald Trump’s trade war deepened his woes.The owner of Kushal Gems had already been forced to lay off a quarter of his staff as revenue more than halved due in part to western sanctions on Russian diamonds. Ebbing demand from the US and China, the world’s biggest diamond markets, amid competition from cheaper lab-grown gems has been a further complication.Now Trump’s blanket 10 per cent tariff on imports, and a potential for an additional levy on India, which processes 90 per cent of the world’s diamonds, threaten greater turmoil — unless a deal can be struck between New Delhi and Washington.“The tariffs will affect us . . . demand will come down,” Mangukiya said in his office, as TV monitors streamed footage from the cramped workshops next door, where about 100 employees hunched over abrasive polishing wheels in the sweltering pre-monsoon heat. “I don’t think things will improve much in the coming months,” he added. “It’s not fun doing business.”Many artisans have lost their jobs in the past 12 months and more than 60 have died by suicide as they struggled with mounting debts More

Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldDonald Trump has announced secondary sanctions on Iranian oil as Washington intensifies a “maximum pressure” campaign against the Islamic Republic amid faltering talks over its nuclear programme. The US president said on Thursday that anyone buying Iranian oil or products would be frozen out of doing business with the US, stepping up a crackdown on a vital revenue source for Tehran and further squeezing China, its biggest importer.“All purchases of Iranian Oil, or Petrochemical products, must stop, NOW!” Trump wrote on his Truth Social Platform. “Any Country or person who buys ANY AMOUNT of OIL or PETROCHEMICALS from Iran will be subject to, immediately, Secondary Sanctions. They will not be allowed to do business with the United States of America in any way, shape, or form.”Trump has taken a tough line on Iran, escalating sanctions targeting its energy sector after announcing in February a “maximum pressure” strategy “aimed at driving Iran’s oil exports to zero”.It was unclear how and when the latest measures would be implemented. A Treasury spokesperson said: “We’ve been very clear and consistent in our actions up until this point: anyone that seeks to engage in or facilitate any stage of Iran’s oil supply chain — including refineries, purchasers, brokers and shippers, among others — is placing itself at significant sanctions risk.”The National Security Council did not immediately respond to a request for further details. Trump’s announcement came after a fourth round of talks between the US and Iran, due to be held this weekend in Rome, was postponed earlier on Thursday. The foreign minister of Oman, which is acting as a mediator, said on X that the delay was made “for logistical reasons”. Oil jumped following the announcement, with international benchmark Brent crude settling up 1.8 per cent at $62.13 a barrel. US marker West Texas Intermediate made similar gains to settle at $59.24/barrel.US envoy Steve Witkoff and Abbas Araghchi, Iran’s top diplomat, have held three rounds of talks in Muscat and Rome as the Trump administration presses Tehran to agree a deal to reverse its nuclear advances.  China — with which the US is embroiled in a bitter trade war — is the country most exposed to Trump’s sweeping secondary sanctions. Beijing accounts for the vast majority of the roughly 1.5mn barrels a day of crude shipped by Iran.“If taken literally, it means that China . . . would have to choose between commercial relations with Iran or the United States,” said Bob McNally, a former adviser to President George W Bush and now head of Rapidan Energy Group. “If China opted to stop importing Iranian oil, Tehran would struggle to redirect those barrels to other countries.”“Unless China defies the United States, Iran is facing a catastrophic loss of crude exports and revenue. This step should move coercive diplomacy quicker towards either a diplomatic agreement or military conflict,” he added.Oil prices have dropped sharply this year amid fears of a global recession stemming from Trump’s trade war. Opec+ production is also rising, giving Washington greater leeway to slap sanctions on crude-producing countries without hurting American consumers. In March, Trump said the US would impose a 25 per cent tariff on all imports from any country that buys oil from Venezuela as part of a pressure campaign against President Nicolás Maduro’s government. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Apple chief executive Tim Cook has warned that President Donald Trump’s tariffs will increase costs by $900mn in the quarter to the end of June, marking the latest sign of how the levies are cascading across corporate America.Cook said in a call with analysts on Thursday evening that “assuming the current global tariff rates . . . do not change for the balance of the quarter, and no new tariffs are added, we estimate the impact to add $900mn to our costs”.But he said the uncertain tariff environment had made it “very difficult to predict beyond June” how the levies would affect Apple’s costs. Apple’s shares fell almost 4 per cent in after-hours trading on Thursday.Cook’s remarks are the latest sign of how Trump’s levies on trading partners are already affecting the US’s largest companies. Fellow tech behemoth Amazon on Thursday added “tariff and trade policies” to the list of factors that posed a risk to its earnings, while McDonald’s said economic jitters were weighing on its customers. Trump on April 2 announced steep “reciprocal” tariffs on a number of countries. While the US has temporarily exempted smartphones from its 125 per cent “reciprocal” tariffs on China, Apple is still affected by an existing 20 per cent tariff on Chinese imports. Cook noted that in the quarter to the end of June, “we do expect the majority of iPhones sold in the US will have India as their country of origin”. Vietnam would meanwhile supply Mac, Watch and AirPods products for the US, while China would remain responsible for the “vast majority” of product sales outside of the US, he said.“What we learned some time ago was that having everything in one location had too much risk with it, and so we have over time, with certain parts of the supply chain, not the whole thing . . . opened up new sources of supply,” Cook said. “You could see that kind of thing continuing in the future.” The Financial Times reported last week that Apple plans to shift the assembly of all US-sold iPhones to India as soon as next year. Any decoupling of Apple’s supply chain from China, however, runs the risk of potential political backlash in the country, which remains its third-biggest market after the US and Europe.Gene Munster at Deepwater Asset Management said Apple’s inability to forecast the effect of tariffs beyond the first half of this year was a concern for investors.“The nagging question comes back: what does that mean for the back half of the year?” he said, adding, “every company is going to have to deal with it . . . but Apple has got the hardest problem of anybody”.Despite the warning, Apple said on Thursday that demand for iPhones had remained robust early in 2025.The company reported revenue of $95.4bn for the quarter ending March 29, up 5 per cent year on year and slightly above consensus estimates of $94.6bn. Net income was $24.8bn, also slightly beating estimates of $24.5bn and up 5 per cent on the same period for the previous year.Revenue for the iPhone, Apple’s flagship product, was $46.8bn, up 2 per cent year on year.China revenue fell slightly to $16bn, down 2.4 per cent, reflecting the competitive challenge Apple has faced from local smartphone makers in recent quarters. Its services business, which includes the App Store, iCloud and Apple Pay, continued to show strong growth, rising 12 per cent to $26.6bn.Apple chief financial officer Kevan Parekh told the Financial Times there had been no sign of a short-term uptick in consumer demand to get ahead of the April tariffs. “For the March quarter, we don’t believe we saw any strong evidence of pull-ahead demand that impacted our results,” Parekh said.Apple’s board approved a 4 per cent increase in its dividend and up to $100bn in share buybacks, slightly lower than the $110bn of the previous year. More

Economists expect nonfarm payrolls to post an increase of 133,000, a steep slide from the 228,000 in March. However, it would be only slightly below the 152,000 average for the first three months of the year.
A downside surprise could be perilous considering the spate of bad economic news and the prevailing angst over the way President Donald Trump is implementing tariffs.

Steven Chechette (C) speaks with a recruiter at the KeySource booth at the Mega JobNewsUSA South Florida Job Fair held in the Amerant Bank Arena on April 30, 2025, in Sunrise, Florida.
Joe Raedle | Getty Images

Clues on whether the U.S. economy is merely in a temporary tariff-induced funk or a more damaging longer-turn downtrend should come Friday when the Labor Department releases the April jobs report.
Economists expect nonfarm payrolls to post an increase of 133,000, which would be a steep slide from the 228,000 in March, according to the Dow Jones consensus. However, it would be only slightly below the 152,000 average for the first three months of the year and likely would be enough to hold the unemployment rate around 4.2%.

But a downside surprise could be perilous considering the recent spate of bad economic news and the prevailing angst over the way President Donald Trump is implementing tariffs against U.S. trading partners.
“If it’s around 150,000 give or take, I think all will be forgiven,” said Mark Zandi, chief economist at Moody’s Analytics. “So I think we’ll end the week feeling OK, not great, but OK. Things aren’t falling apart.”
However, Zandi and other economists say financial markets may want to brace for disappointment. Specifically, he has his eye on anything less than 100,000 for payrolls growth, which he expects would cause the dour economic feelings to take over.
“If the number’s 100,000 or anything south of that, then I think I’d watch out,” he said. “Then all the other data will take on greater importance, and people will be marking down their expectations. That could be a tough day in the markets.”

Bad news piles up

Investors this week had to digest a gross domestic product reading that showed the economy contracted 0.3% annualized in the first quarter. They also saw a weak private payrolls reading from ADP, Labor Department reports showing a steeper slide in job openings and an uptick in unemployment claims, plus a mixed bag on inflation readings.

Even with all that, Wall Street hung tough, pushing the Dow Jones Industrial Average near a 2% gain on the week as investors continued to focus on the latest tariff news out of the White House.
Still, a bad jobs report could quickly change that, and there are underlying indications of weakness.
ADP, a sometimes unreliable gauge for the nonfarm payrolls count, reported just 62,000 in private company hiring, well below expectations. At the same time, job openings fell to about 7.2 million, the lowest since September 2024.
Other recent indicators also don’t bode well for the jobs picture. The unemployment rate for recent college graduates surged to 5.8% in March, the highest since July 2021, while the underemployment rate spiked to 41.2%, the highest since February 2022, according to New York Federal Reserve data.

Job fears

Workers also are growing discontented with their situations.
Specifically, wage satisfaction hit its lowest level, at 54.8%, since November 2021, according to March data also from the New York Fed. At the same time, the average “reservation” wage, or the lowest salary acceptable to take a job, tumbled to $74,236, a slide of nearly 10% from the November 2024 peak.
There’s also the lingering concern over federal government layoffs as Elon Musk’s Department of Government Efficiency slashed the federal workforce since President Donald Trump took over in January. Announced federal layoffs thus far have totaled 281,452, according to consultancy Challenger, Gray & Christmas.
However, the actual toll could be well higher: Atlanta Fed researcher M. Melinda Pitts estimates that including related hits on contractors and grant employees, the total impact could be on the order of 1.2 million. Those cuts, though, won’t be fully felt until later in the year after government severance checks run out.
In the interim, the jobs numbers likely will indicate a slowing economy, though not one falling off a cliff.
Citigroup forecasts job growth of 105,000, which “is not spectacular but given the slowdown in immigration it may be around the rate of job growth required to keep the unemployment rate unchanged,” Citi economist Andrew Hollenhorst wrote.
In addition to the headline payrolls number, the Bureau of Labor Statistics will release wage information, which will be watched closely for signs that inflation is slowing. The Wall Street consensus is that average hourly earnings rose 0.3% in April, good for a 3.9% increase year over year, or slightly higher than in March.
The report will be released at 8:30 a.m. ET.

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General Motors now expects to earn a lot less than it did before President Trump imposed 25 percent tariffs on imported cars and auto parts.General Motors cut its profit forecast for 2025 on Thursday by more than 20 percent and said the Trump administration’s tariffs would increase its costs by $4 billion to $5 billion this year.In a conference call with analysts, G.M. executives said the company now expected to make $8.2 billion to $10.1 billion this year, down from a previous forecast of $11.2 billion to $12.5 billion.“G.M.’s business is fundamentally strong as we adapt to the new trade policy environment,” the company’s chief executive, Mary T. Barra, said.In April, President Trump imposed tariffs of 25 percent on imported vehicles and will begin imposing the same duty on imported auto parts on Saturday. On Tuesday, the president modified how the tariffs are applied to give automakers some relief, including partial reimbursement for tariffs on imported parts for two years.Ms. Barra said G.M. hoped to offset about 30 percent of the impact of the tariffs by increasing production in U.S. plants, cutting costs and working with suppliers to raise their domestic production of parts and components.G.M. had previously said it was increasing pickup truck production at a plant near Fort Wayne, Ind., which will reduce the number of vehicles it imports from Canada and Mexico. Ms. Barra said output at the Fort Wayne factory would increase by about 50,000 trucks this year.She also said G.M. now planned to make more battery modules in its U.S. plants to raise the portion of domestic content in its electric vehicles.About $2 billion in tariff-related cost increases will come from vehicles that are made in Canada, Mexico and South Korea and sold in the United States.Analysts have predicted that the tariffs will add thousands of dollars to the cost of new cars and trucks, and that some or all of that will be passed on to consumers. In the call, G.M.’s chief financial officer, Paul Jacobson, said the company now expected new vehicle prices to rise 0.5 percent to 1 percent this year. Previously, the company forecast that pricing would fall by 1 percent to 1.5 percent.Other automakers are also planning to produce more vehicles in the United States. Mercedes-Benz said Thursday that it would build a new vehicle at an Alabama factory as part of what the German carmaker called a “deepening commitment” to manufacturing in the United States.While the company did not mention tariffs, Mercedes and other carmakers have been at pains in recent weeks to emphasize how many cars they already build in the United States and their plans to make more. Mercedes did not provide details about the car, except to say it will be a new design tailored to the U.S. market and begin production in 2027.The company’s factory near Tuscaloosa, Ala., primarily assembles luxury sport utility vehicles, including electric models, for sale in the United States and export to other markets.Jack Ewing More

When the Covid pandemic hit, factories in China shut down and global shipping traffic slowed. Within a matter of a few weeks, products began disappearing from U.S. store shelves and American firms that depend on foreign materials were going out of business.A similar trend is beginning to play out, but this time the catalyst is President Trump’s decision to raise tariffs on Chinese imports to a minimum of 145 percent, an amount so steep that much of the trade between the United States and China has ground to a halt. Fewer massive container ships have been plying the ocean between Chinese and American ports, and in the coming weeks, far fewer Chinese goods will arrive on American shores.While high tariffs on Chinese products have been in place since early April, the availability of Chinese products and the price that consumers pay for them has not changed that much. But some companies are now starting to raise their prices. And experts say that the effects will become more and more obvious in the coming weeks, as a tidal wave of change stemming from canceled orders in Chinese factories works its way around the world to the United States.The number of massive container ships carrying metal boxes of toys, furniture and other products departing China for the United States has plummeted by about a third this month.The reason consumers haven’t felt many of the effects yet is because it takes 20 to 40 days for a container ship to travel across the Pacific Ocean. It then takes another one to 10 days for Chinese goods to make their way by train or truck to various cities around the country, economists at Apollo Global Management wrote in a recent report. That means that the higher tariffs on China that went into effect at the beginning of April are just starting to result in a drop in the number of ships arriving at American ports, a trend that should intensify.By late May or early June, consumers could start to see some empty shelves, and layoffs could occur for retailers and logistics industries. The major effects on the U.S. economy of shutting down trade with China will start to become apparent in the summer of 2025, when the United States might slip into a recession, said Torsten Slok, an economist at Apollo.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

At the end of a cabinet meeting, the president allowed for the possibility that trade war could disrupt supply chains.President Trump has a message for the nation’s children: Prepare to sacrifice for your country.He was taking questions at the end of one of his marathon cabinet meetings when he finally allowed that, yes, his tariff policies and the trade war he has set off with China may soon result in some emptier-than-usual shelves in stores. Specifically, toy stores.“You know, somebody said, ‘Oh, the shelves are going to be open,’” Mr. Trump said. “Well, maybe the children will have two dolls instead of 30 dolls, you know? And maybe the two dolls will cost a couple of bucks more than they would normally.”This, from the billionaire, crypto-salesman, golf-club-operating, Palm Beach-by-way-of-Fifth Avenue president with the golden office and the golden triplex apartment. There he sat, surrounded by the other billionaires with whom he has filled his cabinet, telling the boys and girls of America they’ll just have to make do with fewer toys this year for the greater good.This grinchy pronouncement by the president had the value of being truthful.Many American toymakers and retailers have started to pause their orders as the effects of Mr. Trump’s tariffs ripple out, threatening to snarl supply chains. It could all have a big impact on this year’s holiday season since it takes months to manufacture, package and ship many products to the United States.Greg Ahearn, chief executive of the Toy Association, a U.S. industry group representing 850 toy manufacturers, told The Times that there is now a “frozen supply chain that is putting Christmas at risk.”“If we don’t start production soon,” Mr. Ahearn said, “there’s a high probability of a toy shortage this holiday season.”You hear that, kids? More

Gross domestic product fell at a 0.3% annualized pace, largely pushed by a surge in imports ahead of President Donald Trump’s tariffs.
Imports soared 41.3%, driven by a 50.9% increase in goods. Imports subtract from GDP, so the contraction in growth may not be viewed as negatively given the potential for the trend to reverse.
The report provided cross signals for the Fed. While the negative growth number might push the central bank to consider lowering interest rates, inflation readings could give policymakers pause.

The U.S. economy contracted in the first three months of 2025, fueling recession fears at the start of President Donald Trump’s second term in office as he wages a potentially costly trade war.
Gross domestic product, a sum of all the goods and services produced from January through March, fell at a 0.3% annualized pace, according to a Commerce Department report Wednesday adjusted for seasonal factors and inflation. This was the first quarter of negative growth since Q1 of 2022.

Economists surveyed by Dow Jones had been looking for a gain of 0.4% after GDP rose by 2.4% in the fourth quarter of 2024. However, over the past day or so some Wall Street economists changed their outlook to negative growth, largely because of an unexpected rise in imports as companies and consumers sought to get ahead of the Trump tariffs implemented in early April.
Indeed, imports soared 41.3% for the quarter, driven by a 50.9% increase in goods. Imports subtract from GDP, so the contraction in growth may not be viewed as negatively given the potential for the trend to reverse in subsequent quarters. Imports took more than 5 percentage points off the headline reading. Exports rose 1.8%.
“Maybe some of this negativity is due to a rush to bring in imports before the tariffs go up, but there is simply no way for policy advisors to sugar-coat this. Growth has simply vanished,” said Chris Rupkey, chief economist at Fwdbonds.

People shop in a Manhattan store on July 27, 2023 in New York City.
Spencer Platt | Getty Images News | Getty Images

Consumer spending slowed during the period but was still positive. Personal consumption expenditures increased 1.8% for the period, the slowest quarterly gain since Q2 of 2023 and down from a 4% gain in the prior quarter.
Moreover, private domestic investment soared during the period, rising 21.9%, primarily driven by a 22.5% surge in equipment spending that also could have been tariff driven.

“No surprise that GDP took a hit in the first quarter, mainly because the balance of trade blew up as companies imported goods like crazy to front-run tariffs. The more telling number for the future of the expansion was consumer spending, and it grew, but at a relatively weak pace,” said Robert Frick, corporate economist with Navy Federal Credit Union. “That’s concerning, but not alarming as it could have been due to bad weather and a spending surge at the end of last year.”
Stock market futures slipped following the report while Treasury yields moved higher.
The report provided cross signals for the Federal Reserve ahead of its policy meeting next week. While the negative growth number might push the central bank to consider lowering interest rates, inflation readings could give policymakers pause.
The personal consumption expenditures price index, the Fed’s preferred inflation measure, posted a 3.6% gain for the quarter, up sharply from the 2.4% increase in Q4. Excluding food and energy, core PCE was up 3.5%. Fed officials consider the core reading a better gauge of long-term trends.
A related reading known as the chain-weighted price index, which adjusts for changes in consumer behavior and other factors, rose 3.7%, well above the 3% estimate.
Markets still are pricing in a rate cut at the June meeting and a total four moves by the end of the year, a potential indication that the Fed will prioritize economic growth over inflation.
Also Wednesday, the Bureau of Labor Statistics reported that its employment cost index rose 0.9% in the first quarter, in line with expectations.
While the economy is still adding jobs and consumers are still spending, the GDP report raises both the danger of recession and the stakes for Trump as he negotiates deals with U.S. trading partners.
The traditional rule of thumb for recession is two consecutive negative quarters, though the official arbiter, the National Bureau of Economic Research, uses a definition of “a significant decline in economic activity that is spread across the economy and lasts more than a few months.”
Markets next will look for the BLS nonfarm payrolls data, to be released Friday. Payrolls processing firm ADP reported Wednesday that private hiring rose just 62,000 in April.

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