By PAUL WISEMAN, ANNE D’INNOCENZIO and CHRISTOPHER RUGABER, Associated Press Business Writers

WASHINGTON (AP) — American businesses are cancelling orders from China, postponing expansion plans and hunkering down to see what trade policy surprises President Donald Trump plans to spring on them next.

The president’s massive and unpredictable taxes on imports seem likely to mean emptier shelves and higher prices for American shoppers, perhaps within weeks.

And the higher costs and paralyzing uncertainty could exact an economic toll: U.S. consumers are in the biggest funk since COVID-19 hit five years ago, and economists say recession risks are climbing.

An early sign of the damage emerged on Wednesday when the Commerce Department released its first look at first-quarter economic growth.

The U.S. economy shrank 0.3% from January through March, the first drop in three years. Gross domestic product — the nation’s output of goods and services — was down from 2.4% in the last three months of 2024. Imports shaved 5 percentage points off first-quarter growth. Consumer spending also slowed sharply.

Asked how much of deterioration in the world’s biggest economy could be traced to Trump’s erratic policies, Boston College economist Brian Bethune said: “All of it.’’

As he promised on the campaign trail, Trump has upended decades of American trade policy. He’s been imposing — then sometimes suspending — big import taxes, or tariffs, on a wide range of targets. He’s currently plastered a 10% levy on products from almost every country in the world. He’s hit China — America’s third-biggest trading partner and second-biggest source of imported goods – with a staggering 145% tariff.

China has responded with retaliatory tariffs of its own – 125% on American products. The take-no-prisoners trade war between the world’s two biggest economies has shaken global financial markets and threatened to bring U.S.-China trade to a standstill.

Gene Seroka, executive director of the Port of Los Angeles, warned last Thursday within two weeks arrivals to the port “will drop by 35% as essentially all shipments out of China for major retailers and manufacturers has ceased.’’ Seroka added that cargo from Southeast Asia also “is much softer than normal with tariffs now in place.’’

After Trump announced expansive tariffs in early April, ocean container bookings from China to the United States dropped 60% — and stayed there, said Ryan Petersen, founder and CEO of Flexport, a San Francisco company that helps companies ship cargo around the world. With orders down, ocean carriers have reduced their capacity by cancelling 25% of their sailings, Flexport said.

Many companies tried to beat the clock by bringing in foreign goods before Trump’s tariffs took effect. In fact, that is a big reason that first-quarter economic growth is expected to come in so low: A surge in imports swelled the trade deficit, which weighs on growth.

By stockpiling goods ahead of the trade war, many companies “will be positioned to ride out this storm for a while,’’ said Judah Levine, research director at the global freight-booking platform Freightos. “But at a certain point, inventories will run down.’’

In the next few weeks, Levine said, “you could start seeing shortages … it’s likely to be concentrated in categories where the U.S. is heavily dependent on Chinese manufacturing and there aren’t a lot of alternatives and certainly quick alternatives.’’ Among them: furniture, baby products and plastic goods, including toys.

Jay Foreman, CEO of toymaker Basic Fun, said he paused shipments of Tonka trucks, Care Bears and other toys from China after Trump’s tariff plan was announced in early April. Now, he’s hoping to get by for a few months on inventory he’s stockpiled.

“Consumers will find Basic Fun toys in stores for a month or two but very quickly we will be out of stock and stock product will disappear from store shelves, ” he said.

Kevin Brusky, who owns APE Games, a small tabletop game publisher in St. Louis, has about 7,000 copies of three different games sitting in a warehouse in China. The tariff bill of about $25,000 would wipe out his profit on the games, so he is launching a Kickstarter campaign next week to help defray the cost of the duties.

Still, his sales representative is urging him to import the games if possible, because he expects that retailers will soon be desperate for products to sell. If he does import the games, Brusky is considering raising its price from $40 to at least $45.

Worried that tariffs will push up prices and drive away customer, retailers have put expansion plans on hold for next year, said Naveen Jaggi, president of retail advisory services in the Americas for real-estate firm JLL. “What they are telling us is: ‘We want to slow down the decision to open up stores and commit to leases’ because they want to watch how the consumer reacts.’’

Consumers already seem to be freaking out. The Conference Board, a business group, reported Tuesday that Americans’ confidence in the economy fell for the fifth straight month to the lowest level since the onset of the COVID-19 pandemic. Nearly one-third of consumers expect hiring to slow in the coming months, nearly matching the level reached in April 2009, when the economy was mired in the Great Recession.

Consumer spending accounts for about 70% of U.S. GDP so if nervous consumers stop shopping, the economic fallout could get ugly. Economist Joseph Brusuelas of the consultancy RSM pegs the probability of a recession within the next 12 months at 55%.

Even gloomier is Torsten Slok, chief economist at Apollo Global Management. He sees a 90% chance of a recession by this summer if Trump’s tariffs remain in place. Businesses are already planning on significant disruptions, particularly from the 145% duties on goods from China, he said.

“You see that in company reactions: Orders are down, (spending) plans are down, costs are up, prices paid are up,” he said.

He expects large layoffs by trucking firms and retailers as soon as late May, as the slowdown in goods coming into U.S. ports from China works its way through the supply chain.

Flexport CEO Petersen said shortages of products are “not a tragedy.”

“It’s going to be much more about the layoffs that follow,” Petersen said. “That’s where the real pain is going to be felt. Shortages mean companies aren’t selling stuff and therefore don’t have the profits that they need to pay their workers.’’

He said the stakes are so high that he expects the U.S. and China to deescalate their trade war and bring down the tariffs. In fact, Trump and his advisers have sounded more conciliatory lately. Treasury Secretary Scott Bessent, for example, said that the triple-digit tariffs the U.S. and China have slapped on each other are not sustainable.

But more abrupt shifts in trade policy risk increasing the uncertainty that has paralyzed businesses and worried consumers.

Moreover, said economist Cory Stahle of the Indeed Hiring Lab, “conditions may worsen in the coming months if people start behaving like they are in a recession. Softening some of the recent trade policy changes may ease some business concerns, but it may already be too late.’’

D’Innocenzio reported from New York

By ELAINE KURTENBACH, Associated Press Business Writer

World shares were mixed on Wednesday as strong corporate profits were offset by uncertainty over President Donald Trump’s trade war.

The Eurozone logged 0.4% growth in the first quarter of the year, stronger than in the last quarter of 2024. But the outlook has been dimmed by higher tariffs on exports from the 20-nation region using the euro.

Germany’s DAX gained 0.4% to 22,531.16 after the country’s center-left Social Democrats voted to approve a coalition agreement. The vote’s results announced Wednesday pave the way to elect Friedrich Merz as the new German chancellor.

In Paris, the CAC 40 also rose 0.4%, to 7,586.37, while Britain’s FTSE 100 was little changed at 8,465.95.

The future for the S&P 500 edged 0.1% lower while that for the Dow Jones Industrial Average was up 0.1%.

In Asian trading, Tokyo’s Nikkei 225 index climbed 0.6% to 36,045.38.

Japanese automakers’ shares were mixed even after Trump signed an order relaxing some U.S. tariffs on imports of autos and auto parts.

Shares in Toyota Motor Corp. lost 1.6% while Honda Motor Co. gained 0.4%. Nissan Motor Co. lost 0.2%.

In Hong Kong, the Hang Seng rose 0.5% to 22,119.41, while the Shanghai Composite index slipped 0.2% to 3,279.03 as surveys showed export orders to Chinese manufacturers declined in April as higher U.S. tariffs on goods from China began to take effect.

South Korea’s Kospi dropped 0.3% to 2,556.61, while the S&P/ASX 200 in Australia surged 0.7% to 8,126.20.

On Tuesday, the S&P 500 climbed 0.6% and the Dow industrials added 0.7%. The Nasdaq composite rose 0.5%.

CEOs say they’re unsure how long their companies can keep piling up profits due to the lack of clarity about Donald Trump’s trade war.

Honeywell International helped lead the market with a gain of 5.4% after reporting stronger profit and revenue for the latest quarter than analysts expected. It also raised its forecast for profit over the full year.

Sherwin-Williams rose 4.8% for another one of the market’s bigger gains after the paint and coatings company likewise reported a better-than-expected profit.

UPS stock swung between losses and gains at the day’s start of trading after it reported a stronger profit than analysts expected for the first three months of 2025. Because it’s the world’s largest package delivery company, UPS can offer a window into how the global economy is doing.

But UPS also said it wasn’t updating its financial forecasts previously given for 2025 because of “the current macro-economic uncertainty.” It also said it expects to cut about 20,000 jobs and close 73 buildings this year. Its stock finished 0.4% lower.

Investors fear Trump’s tariffs could bring a recession if left unaltered because they could freeze global trade and send prices higher for all kinds of products.

U.S. households are getting much more pessimistic because of tariffs, and a report from the Conference Board on Tuesday said their expectations for income, business and job market conditions dropped to the lowest level since 2011 and are well below the level that usually signals a recession ahead.

General Motors slipped 0.6% despite reporting a stronger profit for the latest quarter than analysts expected. The company rescheduled a conference call with investors to discuss its results and forecasts for 2025 to Thursday because of “recent reports regarding updates to trade policy.”

Coca-Cola also overcame an early drop to rise 0.8%. The beverage giant reported better-than-expected earnings in the first quarter and said the impact of tariffs on its business are likely to be “manageable.”

Treasury yields fell. The yield on the 10-year Treasury dropped to 4.17% from 4.23% late Monday.

In other dealings early Wednesday, U.S. benchmark crude oil lost 68 cents to $59.74 per barrel. Brent crude, the international standard, shed 64 cents to $62.64 per barrel.

The U.S. dollar rose to 142.98 Japanese yen from 142.35 yen. The euro fell to $1.1371 from $1.1386.

By ILLIA NOVIKOV, Associated Press

KYIV, Ukraine (AP) — Clinching a deal to end the Russia-Ukraine war “is far too complex to be done quickly,” a senior Kremlin official said Wednesday, as the U.S. labors to bring momentum to peace efforts and expresses frustration over the slow progress.

Meanwhile, a nighttime Russian drone attack on Ukraine’s second-largest city of Kharkiv wounded at least 45 civilians, officials said. The United Nations reported that the number of Ukrainian civilian casualties in the more than three-year war has surged in recent weeks amid Washington’s attempts to broker a peace agreement.

Russian President Vladimir Putin backs calls for a ceasefire before peace negotiations, “but before it’s done, it’s necessary to answer a few questions and sort out a few nuances,” Kremlin spokesman Dmitry Peskov said. Putin also is ready for direct talks with Ukraine without preconditions to seek a peace deal, he added.

In this photo provided by the Ukrainian Emergency Service, firefighters put out a fire following a Russian drone attack that hit apartment buildings in Kharkiv, Ukraine, Wednesday, April 30, 2025. (Ukrainian Emergency Service via AP)

“We realize that Washington wants to achieve quick progress, but we hope for understanding that the Ukrainian crisis settlement is far too complex to be done quickly,” Peskov said. “There are many details and an array of small nuances that need to be solved before a settlement.”

U.S. President Donald Trump has previously expressed frustration over the slow pace of progress in negotiations aimed at stopping the war, which he said he could end in the first 24 hours of his new administration in January. Western European leaders have accused Putin of stalling while his forces seek to grab more Ukrainian land. Russia has captured nearly a fifth of Ukraine’s territory since Moscow’s forces launched a full-scale invasion on Feb. 24, 2022.

Trump has chided Ukrainian President Volodymyr Zelenskyy for steps that he said were “prolonging” the “killing field,” and the U.S. leader has rebuked Putin for complicating negotiations with “very bad timing” in launching deadly strikes that battered the Ukrainian capital, Kyiv.

Trump has long dismissed the war as a waste of American taxpayer money and of lives lost in the conflict. Senior U.S. officials have warned that the administration could abandon the peace efforts, if it sees no solution. That could spell an end to crucial military help for Ukraine and heavier economic sanctions on Russia.

The U.S. State Department on Tuesday tried again to push both sides to move more quickly.

“We are now at a time where concrete proposals need to be delivered by the two parties on how to end this conflict,” department spokeswoman Tammy Bruce quoted U.S. Secretary of State Marco Rubio as telling her.

“How we proceed from here is a decision that belongs now to the president,” she told reporters, relating a conversation that she had with Rubio. “If there is not progress, we will step back as mediators in this process.”

Russia has effectively rejected a U.S. proposal for an immediate and full 30-day ceasefire, making it conditional on a halt to Ukraine’s mobilization effort and Western arms supplies to Kyiv.

Russian Foreign Minister Sergey Lavrov claimed Wednesday that Ukraine had accepted an unconditional truce only because it was being pushed back on the battlefield, where the bigger Russian forces have the upper hand.

“In the context of the developments on the ground, along the front line where the Kyiv regime is increasingly in retreat, they have made an about-turn and started demanding an immediate ceasefire without any preconditions,” Lavrov said at a briefing in Rio de Janeiro where he was attending a ministerial meeting of the BRICS grouping.

He also suggested that Ukraine’s ceasefire promises weren’t credible. Both sides have accused each other of breaking previous truces. Independent verification of the battlefield claims wasn’t possible.

Meanwhile, Ukrainian civilians have been killed or wounded in attacks every day this year, according to a U.N. report presented Tuesday in New York.

The U.N. Human Rights Office said in the report that in the first three months of this year, it had verified 2,641 civilian casualties in Ukraine. That was almost 900 more than during the same period last year.

Also, between April 1-24, civilian casualties in Ukraine were up 46% from the same weeks in 2024, it said.

The Ukrainian air force said that Russia fired 108 Shahed and decoy drones at Ukraine between Tuesday and Wednesday, predominantly at the cities of Dnipro and Kharkiv.

By JUSTIN SPIKE, Associated Press

BUDAPEST, Hungary (AP) — An unprecedented blackout across Spain and Portugal upended the lives of millions across the Iberian Peninsula, a stark reminder of modern society’s reliance on electricity, and how quickly life can descend into chaos when the grid goes down.

Power was nearly completely restored across the region on Tuesday, but the cause of the previous day’s blackout remains unclear. For those affected, the experience will likely leave a lasting impression and raise questions on how to respond if another crisis emerges.

While such widespread failures of power grids are rare, having a plan for how to react to such an event — and how to prepare ahead of time — can make a major difference in staying safe and managing the disruption if the lights go out.

What should I do if the power goes down?

A general power outage affects everyone whether they are at home, at work or on the move. As in Spain and Portugal, electric trains, trolleys and subway systems can stop in their tracks and strand passengers, while traffic lights can go down turning roads into a snarl of gridlock.

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No matter where you are when the power goes down, your first priority should be to remain calm and tend to your most immediate needs like food, water and shelter, and develop a plan for how you can get to a safe place and connect with your loved ones.

According to the American Red Cross, unnecessary travel, especially by car, should be avoided during a power outage. Without traffic lights, roads may become congested or hazardous, increasing the risk of becoming stranded.

If you are at home, exercise caution when using candles or gas lanterns for light because of the risk of fire and noxious gases like carbon monoxide. Use battery-powered lanterns or flashlights if available, but conserve batteries to extend their working life.

Turn off any unnccesary electronics, and unplug appliances such as ovens or stoves that were in use when the power went out. If the power comes back on, surges can damage equipment and appliances can be hazardous if allowed to run unattended.

If the outage lasts for more than a few hours, you’ll want to ensure the food you have on hand doesn’t spoil. According to emergency guidelines published by the Estonian government, refrigerators and freezers should be opened only briefly to preserve the cold. Use perishable food from the fridge first, followed by items in the freezer, then nonperishables.

How do I prepare my home for a power outage?

Preparedness, “be it psychological or real preparedness in case of crisis,” is a key factor in successfully managing disruptive events, Argo Kerb from the Estonian Rescue Board, a government agency, told The Associated Press.

As concerns grow around the world over instability stemming from armed conflict, political discord and climate change, many governments are prioritizing crisis preparedness among their populations.

Passengers react as they wait for news of train departures, at Sants train station in Barcelona, Spain, Tuesday, April 29, 2025. (AP Photo/Emilio Morenatti)

In March, the European Union urged all 450 million residents of the 27-nation bloc to stockpile food, water and other essentials to last at least 72 hours as war, cyberattacks, climate change and disease increase the chances of a crisis.

According to Kerb: “Preparedness is a shared responsibility. It’s a shared responsibility in a family, in a country, but it’s also a shared responsibility in Europe and the world.”

While long-lasting power outages such as the one in Spain and Portugal are relatively uncommon, having a few basic supplies on hand can make a substantial difference in how safely and comfortably they can be endured.

The EU recommends food, water, flashlights, ID papers, medicine and shortwave radios as things to have at home. Matches or lighters, chargers and a power bank for your devices are also recommended.

In a sign of how critical access to information can be in an emergency, battery-powered radios flew off the shelves in Spain and Portugal as internet and cellphone services went down. Keeping a supply of batteries, and a battery powered or hand-crank radio, will help keep you connected to vital information when internet and television services are down.

People queue for petrol in Lisbon, Tuesday, April 29, 2025, the day after a nationwide power outage that shut down gas stations, trains and subways. (AP Photo/Armando Franca)

If you’re caught without these items during a crisis, you’ll need to buy them, but outages can leave electronic payments unavailable. You’ll want to make sure you keep a reasonable quantity of cash on hand.

As European commissioner for crisis management Hadja Lahbib said in a recent video urging preparedness: “In the middle of a crisis, cash is king, and your credit card might just be a piece of plastic.”

In a brochure provided to every household in Sweden, “In Case of Crisis or War,” the Swedish government says each person will need at least three liters (nearly a gallon) of water per day for drinking and cooking, which should be stored at home in bottles or other containers.

It also recommends keeping extra warm bedding like sleeping bags and blankets on hand in case services are interrupted during cold weather.

If you have a portable generator, strictly follow its instructions and never run it indoors or in enclosed spaces as it produces lethal carbon monoxide gas. Plug the devices you want to power directly into the generator, and never attempt to wire it to your home’s electrical system.

Emma Burrows contributed to this report from London.