Consumer attitudes sour amid Trump’s tariff escalation: Survey

Consumer sentiment took a hit in April as President Donald Trump’s new tariffs shook the markets, sparking fears of a looming recession. The latest data from the University of Michigan survey revealed a significant decline in consumer attitudes, surpassing economists’ expectations.

This downward trend marked the fourth consecutive month of deteriorating consumer sentiment, with concerns escalating across all demographic groups. Consumers expressed growing worries about inflation, with year-ahead inflation expectations spiking from 5% to 6.7%, the highest level since 1981.

President Trump recently announced a pause on “reciprocal tariffs” with most U.S. trade partners but increased tariffs on Chinese goods to 145%. Additionally, the White House maintained a 10% tariff on most imported goods. In response, China retaliated by imposing 125% tariffs on U.S. products, intensifying the trade war between the two economic giants.

Despite the tariff pause, American consumers continue to face challenges, with the average effective tariff rate hitting 25.2%, the highest since 1909, according to the Yale Budget Lab. The lab also projected that current tariffs could cost households an extra $4,400 this year.

Economists have warned that these price hikes could lead to a recession, as businesses grapple with higher costs and consumers reduce spending to cope with rising prices. While the economy has shown strength in key areas like low unemployment rates and robust hiring, concerns about inflation persist due to Trump’s tariff policies.

Although recent data indicated a cooling in inflation rates in March, experts remain cautious about the future economic outlook. Greg McBride, chief financial analyst at Bankrate, cautioned against complacency following the favorable inflation report, suggesting that the impact of tariffs could lead to increased inflation in the coming months.

As the uncertainty surrounding trade policies continues to weigh on consumer confidence, it remains essential to monitor economic indicators closely to assess the potential implications on the broader economy.