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(WASHINGTON) — The U.S. economy expanded more than expected as President Donald Trump’s tariffs took hold over recent months, federal government data on Wednesday showed.

U.S. gross domestic product, or GDP, increased at a 3% annualized rate over three months ending in June. The figure marked a sharp acceleration from an annualized contraction of -0.5% over the first three months of 2025.

The reading amounted to sturdy economic growth, suggesting the economy has continued to avert a significant tariff-induced cooldown. A boost in consumer spending helped propel the economic surge, the U.S. Commerce Department said.

To some degree, however, Trump’s levies have blurred the GDP findings.

The government’s GDP formula subtracts imports in an effort to exclude foreign production from the calculation of total goods and services. Changes in the reading on this account reveal neither underlying economic weakness nor strength.

The measure of the GDP fell over the first three months of the year, largely due to a surge of imports as firms stockpiled inventory to avoid far-reaching tariffs. Conversely, a drop-off in imports over the second quarter may have inflated the second-quarter GDP figure.

The GDP growth “primarily reflected a decrease in imports, which are a subtraction in the calculation of GDP,” the U.S. Commerce Department said on Wednesday.

The U.S. economy so far has largely defied fears of a tariff-induced downturn.

The unemployment rate stands near a historically low level and job growth remains robust, though it has slowed from previous highs. Inflation has climbed over the last two months but it remains below where it stood when Trump took office.

In the months following Trump’s “Liberation Day” tariffs, in April, consumer sentiment declined to its lowest level in years, raising concern about a possible pullback in consumer spending, which accounts for about two-thirds of economic activity.

Consumer sentiment has ticked up for two consecutive months, however, as Trump has rolled back some of his steepest tariffs. Consumer spending has proven fairly resilient.

Wednesday’s fresh GDP data arrived hours before the Federal Reserve is set to announce its latest decision on interest rates.

An overwhelming 97% of investors believe interest rates will hold steady, according to the CME FedWatch Tool, a measure of market sentiment.

In theory, sturdy economic growth eases pressure on the Fed to lower interest rates, since consumers and businesses appear undeterred by high borrowing costs. If growth begins to slow, the Fed could seek to lower interest rates as a means of boosting economic performance.

The Fed has adopted a wait-and-see approach as it continues to observe the effects of Trump’s tariffs.

“Despite elevated uncertainty, the economy is in a solid position,” Fed Chair Jerome Powell said at a press conference in Washington, D.C., last month.

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(NEW YORK) — President Donald Trump unveiled a trade agreement with the European Union on Sunday, making it the latest in a series of accords as the White House threatens to slap tariffs on dozens of countries this week.

Prior to the agreement, the European Union faced the prospect of a 30% tariff rate set to take effect Aug. 1. Instead, products from one of the largest U.S. trade partners will be slapped with a 15% tariff.

In exchange, the EU said European companies would buy $750 billion worth of energy-related goods over three years and invest an extra $600 billion in the U.S.

Speaking to reporters on Sunday, Trump touted the agreement as the “biggest deal ever made.” The White House has yet to release full details of the accord.

European Commission President Ursula von der Leyen said the agreement “creates certainty in uncertain times. It delivers stability and predictability for citizens and businesses on both sides of the Atlantic.”

Here’s what to know about what’s in the trade agreement and what comes next:

What’s in the U.S. trade agreement with the European Union?

The trade agreement lowers the tariff rate on European products to 15%, putting it below the threatened rate of 30% but higher than a universal rate of 10% faced by nearly all imports.

The 15% tariffs on European products match the level of levies established for Japanese goods in a separate agreement last week. A trade agreement with Vietnam earlier this month set U.S. tariffs at 20%, while Chinese goods currently face 30% tariffs.

The agreement includes tariff exemptions for aircraft, semiconductor equipment and some chemical and agricultural goods, von der Leyen said.

The European Union purchased about $370 billion worth of U.S. products in 2024, while the U.S. bought about $605 billion worth of Japanese goods, according to the Office of the U.S. Trade Representative, a government agency.

Last year, the U.S. goods trade deficit with the EU was $235.6 billion, which marked a nearly 13% increase from 2023, the agency said.

Top U.S imports from Europe include pharmaceuticals, cars, machinery, wine and perfume.

Tariffs typically raise prices as importers pass along a share of the tax burden to consumers, though prices have largely averted major tariff-related hikes so far.

In exchange for the softening of U.S. tariffs, the EU agreed to reduce its tariff on U.S.-made cars from 10% to 2.5%.

The EU also said European companies would buy $750 billion worth of energy-related goods over three years and invest an extra $600 billion in the U.S.

What’s next ahead of Trump’s tariff deadline on Aug. 1?

So far, Trump has brokered agreements with the United Kingdom, Indonesia, Vietnam, the Philippines, Japan and the European Union. The White House also reached a preliminary accord with China that lowered tit-for-tat tariffs previously imposed by the world’s two largest economies.

On Friday, tariffs are set to take effect for dozens of additional countries, including some of the nation’s major trade partners: Canada, Mexico, South Korea and Brazil.

For his part, the president has insisted that the on-again, off-again levies make up a key part of his negotiation strategy.

“The president and his trade team want to cut the best deals for the American people and the American worker,” White House press secretary Karoline Leavitt said last month when she announced the Aug. 1 deadline.

When asked on Sunday whether the Aug. 1 deadline could be extended, Trump said, “No.”

“Aug. 1 is there for everyone,” Trump added. “The deals all start on Aug. 1.”

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(NEW YORK) — President Donald Trump’s tariffs cost German auto giant Volkswagen about $1.5 billion over the first half of 2025, the company said on Friday.

Sales in North America plunged 16% due primarily to U.S. tariffs, said Volkswagen, which owns a host of brands including Audi, Lamborghini and Porsche.

The company warned of further “challenges” that will arise from “an environment of political uncertainty, expanding trade restrictions and geopolitical tensions,” among other factors.

Volkswagen marks the latest in a string of major carmakers to announce billions in tariff-related losses.

General Motors on Tuesday said tariffs on cars and auto parts drove $1.1 billion in losses over three months ending in June. A day earlier, Jeep maker Stellantis said it expects to have suffered $2.7 billion in losses over the first half of 2025 due in part to U.S. tariffs.

Electric-vehicle maker Tesla this week reported a roughly $3 billion drop in revenue over three months ending in June when compared to the same period a year earlier.

In a statement on Wednesday, Tesla touted a “strong balance sheet” but acknowledged a “sustained uncertain macroeconomic environment resulting from shifting tariffs.”

Tariffs of 25% on vehicles imported into the United States went into effect on April 2. The auto tariffs, which apply to cars and auto parts, threaten to raise costs for carmakers that often oversee an intricate supply chain snaked between the U.S., Mexico, Canada and beyond.

In a memo in March, the White House touted auto tariffs as a means of bolstering domestic car manufacturers and protecting an industry viewed as important to U.S. national security.

The policy, the White House said, will “protect and strengthen the U.S. automotive sector.”

Volkswagen currently faces total US tariffs of 27.5%, the company said, combining the recent 25% auto tariff on top of preexisting 2.5% tariffs.

The company said it expects a worst-case scenario of current tariff levels over the second half of 2025, while in a best-case scenario tariffs could be reduced to 10%.

“There is high uncertainty about further developments with regard to the tariffs, their impact and any reciprocal effects,” Volkswagen said.

A trade agreement struck between the U.S. and Japan this week dropped auto tariffs from the universal level of 25% to 15%, putting foreign carmakers in other countries at a disadvantage.

The U.S. and European Union are near a deal that would also bring tariffs on European goods down to 15%, the Financial Times reported this week. Trump has threatened to raise tariffs on the EU to 30% on Aug. 1, unless the two sides reach a trade agreement.

Despite rising tariff-related costs for automakers, price hikes for new cars have remained low.

Car prices rose 0.6% in June compared to a year earlier, registering well below the overall inflation rate of 2.7%.

In general, tariff-induced inflation has fallen short of economists’ fears in part because companies stockpiled products before the tariffs took effect, allowing them to temporarily avert the higher cost of importing goods, analysts previously told ABC News.

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(WASHINGTON) — President Donald Trump is set to visit the Federal Reserve on Thursday, ratcheting up pressure on the central bank after his repeated calls for lower interest rates.

It marks the first official trip to the Fed taken by a sitting president in almost 20 years.

The extraordinary move comes roughly a week after Trump said he had discussed with a group of Republican lawmakers the possibility of firing Federal Reserve Chair Jerome Powell, before walking back such plans, calling them “highly unlikely.”

This episode sent stock prices tumbling and bond yields climbing, until Trump’s disavowal restored calm to the markets.

Since Trump took office, he has sharply criticized Powell and frequently urged the Fed to cut interest rates.

“We have a man who just refuses to lower the Fed rate,” Trump said of Powell last month. “Maybe I should go to the Fed. Am I allowed to appoint myself? I’d do a much better job than these people.”

The Fed is an independent agency established by Congress. Trump is legally barred from appointing himself the head of the central bank.

Trump also slammed Powell for alleged overspending tied to the central bank’s $2.5 billion building renovation project.

The Fed attributes spending overruns to unforeseen cost increases, saying that its building renovation will ultimately “reduce costs over time by allowing the Board to consolidate most of its operations,” according to the central bank’s website.

Federal law allows the president to remove the Fed chair for “cause” — though no precedent exists for such an ouster. Powell’s term as chair is set to expire in May 2026.

The Fed has held interest rates steady for seven consecutive months, taking up a wait-and-see approach as it observes potential effects of Trump’s tariff policy.

Earlier this month, Powell said he would not rule out a potential interest rate cut as soon as the Fed’s next meeting on July 29 and 30.

“I wouldn’t take any meeting off the table or put any on the table,” Powell told the audience at the European Central Bank forum in Sinatra, Portugal. “It depends on how the data evolve.”

Trump is the first president to visit the Fed since President George W. Bush attended the swearing-in ceremony of Fed Chair Ben Bernanke in 2006. That ceremony marked only the third visit of a president to the Fed, Bernanke noted in his remarks on the day.

Franklin Roosevelt visited when he dedicated the building in 1937 and Gerald Ford visited in 1975, according to Bernanke. He served in the role until 2014.

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(WASHINGTON) — President Donald Trump announced a trade agreement with Japan on Tuesday, making it the largest U.S. trade partner to broker an accord as the White House threatens to impose tariffs on dozens of countries within days.

Before the deal, Japan faced the prospect of a 25% tariff rate set to take effect Aug. 1. Instead, products from the fifth-largest U.S. trade partner will be slapped with a 15% tariff, in exchange for a willingness on the part of Japan to import some goods, among other concessions.

In a post on social media late Tuesday, Trump touted the agreement as a “massive deal.” The White House has yet to release full details of the agreement.

Japanese Prime Minister Shigeru Ishiba also celebrated the accord. “With the national interests of both countries in mind, we were able to reach an agreement at this time,” Ishiba said.

Japan’s Nikkei index surged 3.5% on Wednesday, while major U.S. indexes nudged slightly higher in early trading.

Here’s what to know about what’s in the trade agreement and what comes next:

What’s in the U.S. trade agreement with Japan?
The trade agreement lowers the tariff rate on Japanese products to 15%, putting it below the threatened rate of 25% but higher than a universal rate of 10% faced by nearly all imports.

Even more, the U.S. agreed to set a 15% tariff on Japanese cars, putting it below the 25% tariff rate placed on imported vehicles from other nations.

Japan purchased nearly $80 billion worth of U.S. products in 2024, while the U.S. bought about $148 billion worth of Japanese goods, according to the Office of the U.S. Trade Representative, a government agency.

Cars and auto parts accounted for about $52 billion worth of imported Japanese products, making up more than one-third of products purchased by the U.S., government data shows.
Shares of Japan-based Toyota soared more than 13% on Wednesday, while Honda jumped about 12%.

In exchange for the softening of U.S. tariffs, Japan agreed to open its economy to imports of trucks, rice and other agricultural goods, Trump said.

Japan also agreed to invest $550 billion in the U.S. economy, Trump added, but the president did not specify how the funds would be spent.

How many trade agreements has the White House achieved so far?
When Trump delayed the onset of so-called “reciprocal tariffs” in April, the White House vowed to strike 90 trade agreements in 90 days. Before that deadline elapsed, Trump proposed a flurry of similar country-specific tariffs with a new effect date of Aug. 1.

So far, Trump has brokered agreements with the United Kingdom, Indonesia, Vietnam, the Philippines and Japan. The White House also reached a preliminary accord with China that lowered tit-for-tat tariffs previously imposed by the world’s two largest economies.

For his part, the president has insisted that the on-again, off-again levies make up a key part of his negotiation strategy.

“The president and his trade team want to cut the best deals for the American people and the American worker,” White House press secretary Karoline Leavitt said last month when she announced the Aug. 1 deadline.

Price hikes could hit coffee, shoes, appliances and a range of other products if additional tariffs take effect on Aug. 1, analysts previously told ABC News.

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(NEW YORK) — President Donald Trump’s tariffs are costing Jeep maker Stellantis hundreds of millions of dollars, the company said Monday.

The giant carmaker expects to have suffered nearly $350 million in losses over the first half of 2025 due to direct tariff payments as well as a loss of planned production on account of the company’s response to the policy, preliminary data showed.

In all, the company expects to have lost as much as $2.7 billion over the first half of 2025 as a result of costly efforts to improve profitability and tariff-related expenses. The losses also include compliance charges with Trump’s suspension of financial penalties tied to fuel emissions standards.

Sales in North America plummeted by one-quarter over a three month period ending in June, when compared to the same period a year earlier. The steep decline owed in part to the “reduced manufacture and shipments of imported vehicles, most impacted by tariffs,” Stellantis said.

Tariffs of 25% on vehicles imported into the United States went into effect on April 2. The auto tariffs, which apply to cars and auto parts, threaten to raise costs for carmakers that often oversee an intricate supply chain snaked between the U.S., Mexico, Canada and beyond.

In a memo in March, the White House touted auto tariffs as a means of bolstering domestic car manufacturers and protecting an industry viewed as important to U.S. national security.

The policy, the White House said, will “protect and strengthen the U.S. automotive sector.”

A day after the tariffs took effect, Stellantis announced it would temporarily pause production at two plants: one in Windsor, Canada, and another in Toluca, Mexico. As a result, the company laid off 900 employees across several U.S. facilities in Michigan and Indiana.

Weeks later, Trump eased the auto tariffs, saying the levies would not stack on top of other sector-specific tariffs, such as those on steel and aluminum.

Still, tariffs appear to have weighed on Stellantis over the first half of this year. A press announcement of preliminary earnings data on Monday mentioned the tariff policy six times.

The preliminary figures arrived without company guidance, which Stellantis paused on April 30. The company released the preliminary data in an effort to address the gap between the consensus forecast among analysts and the company’s performance, Stellantis said.

The company had already anticipated challenges this year as it adjusted offerings, slashed U.S. inventory and sought to mend relationships with car dealers.

CEO Antonio Filosa took the helm of the company last month. In a statement on LinkedIn, he issued a company motto attributed to a previous CEO Sergio Marchionne, saying, “Mediocrity is not worth the trip.”

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(NEW YORK) — Consumer sentiment ticked higher in July, marking two consecutive months of improved shopper attitudes as businesses navigated President Donald Trump’s latest tariff threats targeting dozens of countries. The fresh reading matched economists’ expectations.

The recent resurgence of consumer sentiment followed six straight months of worsening attitudes, according to University of Michigan survey data released Friday. Before the swell of optimism, consumer sentiment had fallen to near its lowest level since a bout of inflation three years ago.

Despite the new data, the measure of consumer sentiment remains 16% lower than where it stood in December, before Trump took office.

Year-ahead inflation expectations dropped for a second consecutive month, declining from 5.0% in June to 4.4% this month, the survey data showed. The anticipated inflation level would still mark a major increase from the current year-over-year inflation of 2.7%.

The new report on consumer sentiment came a day after the release of retail sales data that showed unexpectedly strong performance in June. Robust shopper appetites last month suggested that the uncertainty surrounding Trump’s tariffs hadn’t prompted households to stash extra income.

Consumer spending, which accounts for about two-thirds of U.S. economic activity, is a key bellwether for the outlook of the nation’s economy.

So far, key measures of the economy have largely defied fears of a tariff-induced downturn. The unemployment rate stands near a historically low level and job growth remains robust, though it has slowed from previous highs. Inflation has climbed over the last two months but it remains below where it stood when Trump took office.

Some analysts expect price increases to accelerate over the coming months as tariffs take hold, though many have acknowledged that the path forward remains unclear amid Trump’s fluctuating policies.

Typically, importers pass along a share of the tariff-related tax burden in the form of higher costs for shoppers. A host of major retailers, including Walmart and Best Buy, have warned of potential price hikes as a result of Trump’s levies.

Trump has rolled back many of his steepest tariffs over recent months, including a sky-high levy on China, the top source of U.S. imports. In recent days, however, Trump announced plans to slap tariffs as high as 50% on dozens of countries, including 25% tariffs on top U.S. trade partners such as Japan and South Korea.

The fresh levies are set to take effect on Aug. 1. In addition, a proposed 50% tariff on copper imports could intensify the impact of the country-specific levies.

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(WASHINGTON) — Private spaceflight is transforming from joy rides for billionaires into a gateway for nations to establish their space presence, one expert says, as the latest Axiom Space mission returned to Earth on Tuesday.

The mission marked a historic moment for India, Poland and Hungary, who sent astronauts to the International Space Station (ISS) for the first time in decades. Rather than waiting for traditional space programs, these nations booked private flights through Axiom Space, which aims to build the world’s first commercial space station, and SpaceX, which provided the spacecraft the astronauts traveled on.

“This is huge,” said ABC News contributor and astrophysicist Hakeem Oluseyi. “These nations didn’t go through NASA or wait for Russia. They booked the private flight and brought their own experiments. That is a global power flex.”

The mission serves as more than just a demonstration of private space capabilities, Oluseyi said. With NASA planning to decommission the ISS by the end of 2030, Axiom Space, headquartered in Houston, is positioning itself to become “the new landlord of low Earth orbit,” according to Oluseyi. The company has already secured agreements with multiple countries for its own planned space station.

However, the increasing privatization of space access raises questions about America’s future role in space exploration. While another private company, SpaceX, currently provides the only means for launching astronauts from U.S. soil, Oluseyi emphasized the importance of maintaining both public and private investment in space.

“We perform best when there is a combination of both public and private investment,” Oluseyi said, noting current federal budget pullbacks in space and science funding. “Strategically, America needs both public and private to maintain leadership… This is a time not to pull back, but to invest ever more aggressively.”

As space becomes more accessible to new participants, Oluseyi said continued investment and innovation are crucial for maintaining U.S. leadership in space exploration — even as private spaceflight takes off.

“You can’t stop that cat out of the bag, but you can maintain leadership, you can be the one to innovate and take us to the next level,” he said.

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(NEW YORK) — Stocks were mixed in early trading on Monday after President Donald Trump over the weekend issued 30% tariffs on the European Union and Mexico, rekindling tensions with two of the largest U.S. trade partners and threatening to raise consumer prices.

The Dow Jones Industrial Average dropped 115 points, or 0.26%, while the S&P 500 dropped 0.15%. The tech-heavy Nasdaq ticked up 0.04%.

Trump on Saturday announced new tariffs on the European Union and Mexico that will take effect on Aug. 1. That start date matches the onset of levies issued for more than 20 other countries in recent days, including top trade partners Canada, Japan and South Korea.

In a letter posted on his social media platform, Trump faulted Mexico for its alleged failure to stop the transport of fentanyl into the U.S. Between September and April, nearly all fentanyl seized by the U.S. came through the southern border with Mexico, according to U.S. Customs and Border Patrol, or CBP.

In response to a previous set of tariffs issued in February, Mexico vowed to take steps to address the transport of fentanyl, prompting Trump to temporarily pause the levies.

In a statement posted on X, Mexican economic minister Marcelo Ebrard said Mexico had already been negotiating with the U.S. to “protect businesses and jobs.”

“We were informed that, as part of the profound changes in U.S. trade policy, all countries will receive a letter signed by the President of the United States establishing new tariffs starting August 1st,” Ebrard said. “We stated at the meeting that this was an unfair deal and that we did not agree with it.”

Trump sharply criticized the EU in a separate letter posted on social media, claiming the the U.S. runs an unacceptably high trade deficit with the EU. In a statement released on Saturday afternoon, European Commission President Ursula von der Leyen said the EU remains committed to “dialogue, stability, and a constructive transatlantic partnership.”

ABC News’ Kelsey Walsh and Patricio Chile contributed to this report.

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(WASHINGTON) — President Donald Trump has posted two letters on his social media platform announcing new tariffs on the European Union and Mexico that will take effect on Aug. 1.

Trump will impose a 30% tariff on Mexico due to fentanyl crossing the border, he said in a letter to Mexican President Claudia Sheinbaum.

“Mexico has been helping me secure the border, BUT what Mexico has done is not enough. Mexico still has not stopped the Cartels who are trying to turn all of North America in a Narco-Trafficking Playground,” Trump wrote in the letter.

Mexico did not face a new tariff on April 2, the day of Trump’s so-called “Liberation Day” tariff rollout. There remains a 25% tariff on non-USMCA-compliant goods from Canada and Mexico, as well as a 50% tariff on steel, aluminum and derivative products.

The United States mainly imports vehicles, machinery and electrical equipment, alongside agricultural products such as fruits, vegetables, beer and spirits from Mexico.

Trump said the EU will also face a 30% tariff as a result of the United States trade deficit, in a letter addressed to European Commission President Ursula von der Leyen.

The EU, one of the largest trading blocs with the U.S., primarily exports pharmaceutical products and mechanical appliances to the U.S.

According to the Office of the U.S. Trade Representative, the U.S. goods trade deficit with the European Union was $235.6 billion in 2024, a 12.9 % increase over 2023.

Trump has long touted productive conversations that left him “extremely satisfied” regarding a trade deal with the EU; however, at one point, he once threatened tariffs as high as 50%.

In his letters, Trump again promised that there would be no tariffs on manufacturing companies that decide to build in the U.S.

The European Commission president responded Saturday saying the 30% tariff “would hurt businesses, consumers and patients on both side of the Atlantic.”

“We will continue working towards an agreement by August 1,” von der Leyen said. “At the same time, we are ready to safeguard EU interests on the basis of proportionate countermeasures.”

In a statement posted on X, Mexican economic minister Marcelo Ebrard said Mexico had already been negotiating with the U.S. to “protect businesses and jobs.”

“We were informed that, as part of the profound changes in U.S. trade policy, all countries will receive a letter signed by the President of the United States establishing new tariffs starting August 1st,” Ebrard said. “We stated at the meeting that this was an unfair deal and that we did not agree with it.”

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