What: Trump's proposed tariffs trigger significant consumer anxiety, with confidence indices showing the sharpest decline since 2021 as Americans brace for higher prices across retail sectors.

Why it is important: This consumer sentiment shift represents more than temporary anxiety; it reflects a structural change in retail economics, as evidenced by February 2025 data showing widespread supply chain restructuring and the elimination of key trade exemptions that previously supported competitive pricing.

The recent decline in US consumer confidence mirrors growing concerns about President Donald Trump's expanding tariff agenda. The Conference Board's Consumer Confidence Index has recorded its steepest drop since August 2021, with survey respondents increasingly mentioning trade and tariffs as primary concerns. This shift marks a stark contrast to the optimism that followed Trump's election triumph in November. Consumer anxiety is particularly focused on potential price increases, with inflation expectations jumping from 5.2% to 6% in February.

The impact extends beyond consumer sentiment, affecting various sectors of the retail industry. Companies like Clorox report increasing consumer stress, with customers maximising product usage to cope with economic pressures. The situation is further complicated by broader economic challenges, including concerns about business conditions, employment, and stock market performance. This confluence of factors has created a complex environment where consumer wariness about tariffs intersects with existing inflationary pressures, potentially reshaping spending patterns across the retail sector.

IADS Notes: The current consumer anxiety about Trump's tariffs is well-founded, as evidenced by significant developments throughout 2024 and early 2025. As reported in January 2025, BCG's analysis projects that a 60% tariff on Chinese goods could add USD 640 billion to US import costs, fundamentally reshaping retail economics. This concern has already manifested in concrete policy changes, with February 2025 seeing the elimination of the USD 800 de minimis rule, affecting millions of daily shipments and forcing retailers to restructure their operations. The impact extends beyond direct cost implications; October 2024 port strikes disrupted over 100,000 shipping containers, compelling retailers to adopt more agile supply chain strategies. The beauty industry particularly exemplifies these challenges, with January 2025 reports showing widespread disruption across 25,000 mass-market products. Consumer confidence has responded accordingly, with the Conference Board's index showing its largest decline since August 2021, reflecting the broader market anxiety about potential price increases and economic uncertainty.

Donald Trump’s tariffs spook consumers weary of inflation