Companies have warned of rising prices. Markets have plunged. Bad vibes are back. President Donald Trump’s tariff plans might not be in full force yet — but Americans are feeling the strain.
Ahead of Trump’s so-called “Liberation Day” on April 2, when he plans to unveil a range of broad tariffs on key trading partners, the University of Michigan’s consumer survey found that Americans’ economic sentiment took a dive; the consumer reading was down 11.9% from February and 28.2% from one year ago.
Inflation fears largely drove the downturn, and consumers are worried about “the potential for pain amid ongoing economic policy developments,” the survey said. One of those developments is Trump’s tariff plans; Trump has maintained that his trade policies will bring in revenue and restore jobs but acknowledged in February that Americans will feel “some pain” as a result.
That pain has already started taking shape. Federal Reserve Chair Jerome Powell said during a March press conference that the poor consumer sentiment among Americans, especially concerning high grocery prices, “probably has to do with turmoil at the beginning of an administration that’s making big changes in policy.”
Powell also said that “a good part” of the Federal Open Market Committee’s latest inflation projections, which showed higher inflation than its December forecast, is coming from Trump’s tariffs.
“I do think with the arrival of the tariff inflation, further progress may be delayed,” Powell said.
Trade policy experts said that some companies might absorb some of the cost of Trump’s planned tariffs, but Americans are likely to see higher prices on impacted goods like groceries and cars. While Trump has also said that his plans will promote production in the US, the uncertainty is leaving markets, businesses, and Americans on edge.
Alex Jacquez, who advised former President Joe Biden on the White House National Economic Council, told reporters on a Tuesday press call that uncertainty with Trump’s trade policy makes it “hard for the American people to see that they are going to have a strategy long term for how they should be spending their money and investing.”
“When the president doesn’t have a clear strategy or direction, it is extremely difficult for businesses in particular and consumers as well, to plan for the future, and that’s why you’re seeing so much uncertainty in the consumer market right now and so much uncertainty in the business community,” Jacquez said.
Kush Desai, a White House spokesperson, told Business Insider that “fearmongering by the media and Democrats about President Trump’s America First economic agenda isn’t going to change the fact that industry leaders have already made trillions in investment commitments to make in America.”
“President Trump used tariffs to deliver historic job, wage, and economic growth with no inflation in his first term, and he’s set to restore American Greatness in his second term,” Desai said.
Trump-voter Joseph Dennis, 73, previously told BI he’s concerned about the administration’s decisions on tariffs and federal job cuts and wishes they were less extreme. He’s one of many retirees watching their investments fluctuate in value under Trump.
“I hope he knows what he’s doing, but I’m not so sure,” Dennis said.
The economy’s reaction to Trump
Stock markets worldwide have tumbled in anticipation of Trump’s Liberation Day; the Nasdaq-100 declined 2.4% on Monday morning, the S&P 500 declined by 1.5%, and the Dow Jones Industrial Average went down 350 points.
It’s not just Liberation Day; the uncertainty with Trump’s plans have kept markets fluctuating for weeks. Additionally, some companies have been preparing to raise prices in anticipation of Trump’s tariff plans. Target CEO Brian Cornell told CNBC in early March that Trump’s tariff could lead the company to raise prices on produce.
Trump has warned of a range of tariffs to come as early as April 2, including tariffs on goods from Canada and Mexico, auto tariffs, and reciprocal tariffs on all the countries that have imposed tariffs on US goods. However, the president told reporters on March 23 that he “may give a lot of countries a break.”
“I don’t change. But the word flexibility is an important word,” Trump said.
That “flexibility” is making it difficult for businesses and consumers to prepare for the future, Heather Boushey, an economist who served under former President Joe Biden’s Council of Economic Advisors, told reporters.
“Both businesses and consumers are getting shaken by this approach. They see it as chaotic. They don’t see what the plan is, but there’s a concept of a plan, and that expectations are falling and falling rapidly,” Boushey said.
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