It’s not just the stock market.
In the few weeks since President Donald Trump announced sweeping tariffs, a series of indicators from across the economy suggest anxiety — or even outright panic — is in the economic driver’s seat.
Consumer confidence is at a near-record low. People are panic-buying products that are likely to see major price hikes soon, from cars to consumer electronics. Businesses are also already predicting a slowdown in production, suggesting that Trump’s tariffs are actually working against his stated — and likely impossible — goal of reviving American manufacturing.
This has a real impact on the health of the US economy. Confident consumers spend and support confident businesses, which fuel economic growth and hire workers. Trump can’t achieve his goals of onshoring manufacturing and ushering in a golden era of American prosperity when both consumers and businesses are spooked.
It might be too early to tell whether Trump’s tariffs will lead to a recession, but it’s clear that they are already shifting economic activity in the US. Here’s what the data show.
Consumers are shopping scared
The leading metric of consumer confidence is the University of Michigan’s consumer confidence index, which measures how favorable Americans feel about the economy based on their responses to a series of survey questions.
That index plunged immediately after Trump’s tariffs, down to 50.9 — lower than during the Great Recession and close to the historic low in the period following the Covid-19 pandemic.
This suggests that Trump’s tariffs are not just sending shockwaves through the stock market, but also the pocketbooks of everyday Americans, who were already struggling with the aftermath of high inflation.
Economists expect that consumers will eventually pull back on spending as a result. But in the short term, they appear to be stocking up. But economists say the spike in certain spending is neither sustainable nor evidence of a healthy economy.
“When you announce you’re doing tariffs in two weeks, that’s going to lead to a big decline in spending in two weeks, but it may lead to a really big increase in spending in the short term,” said Michael Madowitz, principal economist at the Roosevelt Institute, a progressive economic think tank. “I bought a bunch of parts to fix my really old car.”
He’s not the only one: In March, motor vehicle and parts dealers saw a 5.3 percent increase in sales from the previous month and an 8.8 percent rise from the same month last year. Trump had, at that point, announced 25 percent tariffs on fully assembled automobiles, scheduled to take effect by May 3.
In March, electronics and appliance stores also saw a 0.8 percent increase from February and a 1.8 percent increase from the same month last year. China is one of the world’s largest producers of consumer electronics, and Trump had been talking about hitting it with tariffs for months at that point.
Trump has since offered a limited exception for consumer electronics from his baseline 145 percent tariff on Chinese imports, but it’s not clear how much that will insulate those products from price hikes. Trump has also said that consumer electronics could face additional, yet-to-be-announced tariffs on products that contain semiconductors.
American manufacturing is in trouble
Trump has promised that “jobs and factories will come roaring back into our country” as a result of his tariffs. His hope is that, in making it more expensive to import foreign goods, companies will seek to invest in bringing their production to the US, therefore bringing prices down for American consumers in the long run. He also claims that the tariffs will stop other countries from “cheating” America with trade imbalances.
However, economists were skeptical of those claims from the outset. The Economist called the tariffs the “most profound, harmful and unnecessary economic error in the modern era,” based on an “utterly deluded” understanding of economics and history.
Now, the data shows that Trump’s tariffs are having the opposite of their intended effect: US manufacturing has slowed in the weeks since he made the announcement, and economists expect that trend to continue.
Surveys of American manufacturers conducted by the Federal Reserve Banks of New York and Philadelphia revealed a pessimistic outlook. Both expectations for general business activity and for new product orders declined sharply in April.
The New York Fed’s future general business conditions index dropped from 12.7 in March to 7.4 this month, its second-lowest reading in more than two decades. The Philadelphia Fed’s new order index dropped from 8.7 in March to -34.2 this month, its lowest reading since April 2020, just after the pandemic began.
That’s bad news for the businesses that Trump said would benefit from his tariff policies, but are now struggling to plan for the months and years ahead in an environment of such uncertainty. In an effort to convince him to abandon the tariffs, some American manufacturers have avoided criticizing them directly and instead sought to promote how much they are already investing heavily in their US factories.
But it’s not clear that even overtures from American manufacturing leaders and panic among consumers will persuade Trump to give up his decades-long obsession with tariffs as a solution to what he perceives as foreign trade barriers.
