Stocks slide as Trump threatens tariffs on Apple and European Union

(WASHINGTON) — Government data to be released on Wednesday is expected to show a sharp economic slowdown over the initial months of President Donald Trump’s second term as a flurry of tariff proposals stoked uncertainty among businesses and consumers, analysts told ABC News.

The measure of gross domestic product, or GDP, will likely be lowered by a surge of imports as firms stockpiled inventory to avoid far-reaching tariffs, though the trend did not reflect economic weakness, analysts said.

The government’s GDP formula subtracts imports from exports in an effort to exclude foreign production from the calculation of total goods and services.

The report will detail GDP over the first three months of 2025, offering the first look at a top gauge of economic health since Trump took office.

The data covers a period before the so-called Liberation Day tariffs went into effect in early April.

Analysts widely expect a steep decline in economic performance at the outset of this year, though they disagree over the severity of the slowdown.

Some analysts believe the data will show the U.S. economy tipped into a contraction over the most recent quarter, which would likely intensify warnings on Wall Street about a possible recession.

Bank of America Global Research and BNP Paribas both expect the economy to have grown at an annualized rate of 0.4% over a three-month stretch at the start of 2025, which would mark a sharp decline from a rate of 2.4% at the end of last year.

S&P Global Ratings expects the data to show the economy contracted at an annualized rate of 0.3% at the outset of this year. A forecast from the Federal Reserve Bank of Atlanta, which excludes gold imports, shows the economy shrank at a 1.5% annualized rate.

“We anticipate a marked slowdown in the U.S. economy during the first quarter, driven by increasing policy uncertainty surrounding trade, tariffs, and immigration,” S&P Global Ratings said in a note to clients.

The data may be skewed by a flood of imports as companies sought to circumvent tariffs, S&P Global Ratings said. The GDP measure deducts imports to exclude foreign-made goods and services, so a one-time import surge could blur the finding.

“The first-quarter GDP reading may not provide an accurate reflection of underlying economic conditions because it’s significantly influenced by the frontloading of imports,” S&P Global Ratings said.

Many observers define a recession through the shorthand metric of two consecutive quarters of decline in a nation’s inflation-adjusted GDP. The National Bureau of Economic Research, a research organization tasked with formally identifying a recession, uses a more complicated definition that draws on a range of indicators.

Despite flagging consumer sentiment and ongoing market turmoil, some key measures of the economy remain fairly strong.

The unemployment rate stands at a historically low level and job growth remains robust, though it has slowed from previous highs. Meanwhile, inflation cooled in March, putting price increases well below a peak attained in 2022, data showed.

The sturdy data offers at best partial reassurance, some economists previously told ABC News.

Measures of the economy like inflation and hiring are released one month after the data is gathered, and they often reflect slow-moving shifts in business or consumer behavior, the economists said. As a result, such measures can prove outdated, especially when the economy is in flux.

Speaking at the Economic Club of Chicago earlier this month, Fed Chair Jerome Powell acknowledged the “solid condition” of the U.S. economy, but he cautioned about signals of a potential slowdown.

“Life moves pretty fast,” Powell said.

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(NEW YORK) — President Donald Trump’s administration is set to begin collecting defaulted student loan payments next week — which could harm the credit scores of millions of borrowers.

Roughly 5 million borrowers will have their university and college loans sent for collections beginning May 5, the Department of Education said last month.

When that happens, the borrowers’ credit scores could be impacted, since ratings agencies are often alerted when collections ensue, experts told ABC News.

Here’s what to know about the collections and what it could mean for borrowers’ credit scores:

Why are the credit scores of some student loan borrowers at risk?

Student loan borrowers are considered delinquent if they fail to make a loan payment for 90 days. When late payment stretches on for a total of 270 days, then the borrower falls into default. When a federal student loan enters default, the government can send it for collections, garnishing wages or even taking money from Social Security payments or tax refunds.

The risk to borrowers’ credit scores dates back to policy decisions made when former President Joe Biden’s administration resumed federal student loan payments after a period of relief that had been enacted during the COVID-19 pandemic.

When the Biden administration lifted the pause in the fall of 2023, the White House set in motion a 12-month moratorium. The administration did not count late payments toward delinquency. That moratorium ended in October — meaning borrowers could be considered delinquent if they didn’t make payments for more than 90 days, returning to the way the process worked pre-pandemic.

More than 9 million student loan borrowers will face “significant drops” in their credit score when delinquencies resume over the first half of 2025, the New York Federal Reserve found in March.

“These credit score effects show up with delinquencies – that’s when the credit score takes the hit,” Judith Scott-Clayton, a professor of economics and education at Teachers College, Columbia University, told ABC News.

Similarly, the Biden administration in 2023 initiated a one-year moratorium during which it would not report loan defaults to credit bureaus. That pause expired on Jan. 1.

Now, the Trump administration is set to begin collections on defaulted loans, causing further potential damage to credit scores, some experts told ABC News.

“The longer you remain delinquent, that will compound,” Kate Wood, a writer and spokesperson at NerdWallet, told ABC News.

How much do late college loan payments hurt a borrower’s credit score?

Late payments on a college loan can significantly hurt a borrower’s credit score, studies show.

The New York Federal Reserve found student loan delinquency causes a borrower with a credit score of 760 points or higher to lose 171 points on average, according to a study of loan data between 2016 and 2019.

Subprime borrowers with credit scores at or below 620 lose on average 87 points in the event of a student loan delinquency, the study said.

“The consequences are worse for those starting out with good credit scores,” Scott-Clayton said.

VantageScore, a credit-scoring system, said in February that late college loan payments can result in a credit score loss of up to 129 points. Student loan borrowers who make payments on time could see credit score increases of up to 8 points, VantageScore said.

What does a damaged credit score mean for borrowers’ finances?

Borrowers with lowered credit scores will face greater difficulty making big-ticket purchases like homes, cars or even refrigerators for which they may need to take out a loan, experts told ABC News.

When consumers with reduced credit scores seek a loan, they face higher interest rates as banks determine that the borrower risks an inability to repay.

“We’re talking about a chunk of the population who won’t be able to buy a car because they won’t be able to get access to a car loan or it will be prohibitively expensive,” Kirabo Jackson, a professor of education and social policy at Northwestern University, told ABC News.

A lower credit score can even jeopardize an individual’s job prospects, since some employers check an applicant’s credit, Jackson said.

Some states restrict an employer’s ability to check an applicant’s credit, including California.

The damage to borrower’s credit scores may cause a hiccup in the overall economy, since some individuals may forgo big purchases, Jackson said.

“It’s not a huge effect for the economy but it certainly won’t be helpful,” Jackson said. “And when you talk about the impact for the individuals, it will be quite considerable.”

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(WASHINGTON) — If this past weekend in European politics is an indicator of anything, it’s that the “Trump effect” is real, and its reverberations are unpredictable.

Three European Union countries held elections on Sunday — Romania, Poland and Portugal — with the results failing to show any clear trend for the future of European politics. The elections did, however, indicate the American president’s growing influence on the continent.

The disparate responses from voters in all three countries — and the lack of any decisive victory for any one party or candidate in Portugal or Poland — hint that the political polarization that has roiled the U.S. over the past decade is a global trend, not merely an American one.

As to whether President Donald Trump and the “Make America Great Again” movement swirling around him can establish European avatars, the question remains an open one.

“I don’t know if I have a firm answer,” Celia Belin, a senior policy fellow at the European Council on Foreign Relations and head of its Paris office, told ABC News. “At the moment, we are all monitoring what is happening and how this influence can establish itself.”

“It’s very early,” Belin added. “This is an ongoing phenomenon.”

While it’s unclear what the extent of Trump’s impact on European politics will ultimately be, Belin said the impact is “stronger” than it was two years ago.

Trump’s influence — indirect and direct — has given populist movements like Germany’s Alternative for Germany party, Poland’s nationalist Law and Justice (PiS) party and Portugal’s far-right Chega party a clear boost, evident in recent elections in each country.

“If I am to compare with two years ago, for example, it is stronger, it is more united, it gives inspiration to a ton of populist nationalist leaders in Europe,” Belin said. “It’s getting stronger. That’s the direction it’s going in right now.”

The groundswell of grievances that carried Trump to the Oval Office twice is not merely an American phenomenon and manifests differently in individual nations. Concerns over globalization, immigration, inequality, the cost of living, low rates of economic growth, progressivism and national identity are near-universal in the Western democratic world.

Trump seized upon those conditions in the U.S. and right-wing leaders in Europe are seeking to do the same.

Election week in Europe

This week’s election results in Romania, Poland and Portugal, however, suggest the translation of Trumpism into European political languages remains incomplete.

In Romania, voters opted for Bucharest Mayor Nicusor Dan’s pro-Europe, pro-NATO, pro-Ukraine platform. Dan won with around 54% of the vote.

Dan’s opponent — Trump supporter George Simion, who courted the MAGA movement and even visited the U.S. during his campaign — came up short, though he vowed to continue “our fight for freedom and our great values along with other patriots, sovereignists and conservatives all over the world.”

In Poland, the presidential election saw liberal Warsaw Mayor Rafal Trzaskowski secure an unexpectedly tight victory in the first round of voting with around 31% of the vote, beating out right-wing rival Karol Nawrocki — who was personally endorsed by Trump — who had 29.5% of the vote.

The two men will go into the second round of voting on June 1, hoping to draw voters from other minor candidates, among them a significant bloc which voted for far-right firebrand Slawomir Mentzen, who came third with 14.8%.

Piotr Buras, a senior policy fellow at ECFR at the head of its Warsaw office, told ABC News that Trump has loomed large over the election.

Nawrocki framed himself as the Trump-friendly candidate, along with his backers in the Law and Justice party, criticizing Trzaskowski’s Civic Platform party and Prime Minister Donald Tusk for allegedly undermining Polish-American relations.

“We used to have a nationwide consensus on America,” Buras said, with voters generally warm to the idea of close ties with Washington, D.C. “Now, because of this ideological divide in Poland, because of the U.S. and because of Trump’s approach to Europe, Poland is suddenly divided on how to go about America,” he added.

In Portugal, meanwhile, the far-right Chega party gained a record 22.6% share of the vote, blowing open the long-standing two-party domination of the country’s political scene even though it was unable to overhaul the ruling center-right Democratic Alliance.

“I am not going to stop until I become the prime minister of Portugal,” Chega leader Andre Ventura — who was among the foreign politicians invited to Trump’s second inauguration — said.

Making Europe great again?

Such confidence in defeat may be buoyed by the strong foundations populist parties and candidates are putting down in Europe. Across the continent, far-right groups are winning historically large chunks of the electorate and dominating political debates, even without securing the reins of power.

In the U.K., the right-wing Reform party recorded a stunning performance in the May local elections, winning hundreds of council seats and leaving leader Nigel Farage — well-known for his cozy relationship with Trump and the MAGA movement — to declare an end to the traditional dominance of Britain’s two major parties.

In Germany’s February parliamentary election, the far-right Alternative for Germany (AfD) party converted years of growing popularity to win around 21% of the vote and become the second-largest party in the Bundestag.

U.S. Vice President JD Vance conducted his first foreign trip in his new position to Germany in February, shortly before the election, speaking at the Munich Security Conference on February 14.

In his speech addressing the annual security conference, Vance criticized Europe for hindering free speech, suggesting the conference’s decision to ban AfD members from attending was a form of censorship.

“In Britain, and across Europe, free speech, I fear, is in retreat,” Vance said. “I believe that dismissing people, dismissing their concerns, or, worse yet, shutting down media, shutting down elections, or shutting people out of the political process protects nothing. In fact, it is the most surefire way to destroy democracy.” Many political analysts considered Vance’s remarks to be a tacit endorsement of AfD from the Trump administration.

And in France, President Emmanuel Macron has thus far held off the persistent challenge for the presidency from far-right leader Marine Le Pen and the National Rally, but he was unable to stop the party from becoming the largest in the National Assembly in 2024. Only a shaky minority government has kept the party out of the prime minister’s office.

The insurgent parties are coordinating. Leaders have increasingly been drawn to American conservative events, such as the Conservative Political Action Conference — the first-ever European installment of which was held in Budapest, Hungary, in 2022.

And this year, right-wingers gathered for the Make Europe Great Again conference in Madrid in February, organized by Spain’s far-right VOX party.

Buras noted rumors that Vice President JD Vance may even attend a planned CPAC event in Poland in late May, in what could only be interpreted as a show of support for Nawrocki. The event raises the prospect of American “interference almost, or at least influence, from the U.S.,” Buras said.

MAGA blowback

Trump is just as divisive abroad as he is at home. Indeed, polls consistently indicate that many European voters are skeptical of, unsettled by or outright hostile to the American president.

There is, then, no guarantee that a MAGA association will put foreign populists in power. Recent elections in Canada and Australia, for example, saw center-left establishment parties secure victory against conservative opponents they sought to smear as Trumpian.

Trump’s return to the White House “has woken up the anti-populist or anti-nationalist movements,” Belin said. “It gives them a foil. … You want to mobilize your electorate and use the U.S. of Donald Trump as a sort of scarecrow — the mobilization effect goes in two directions.”

“It fuels the extremist base and so it excites a lot of people, but it also fuels the other side and it also frightens the middle,” Belin said.

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