President Trump's escalating trade war has shaking economic confidence among Americans across the political spectrum. Survey results Released on Friday.
Preliminary results show that the University of Michigan's Consumer Sentiment Index plummeted from 10.5% to 57.9. This was the lowest level in the index since November 2022, falling to 56.7 amid steep inflation and aggressive Federal Reserve hikes.
“Many consumers cited a high level of uncertainty about policy and other economic factors,” said Joan Huss, director of the Michigan Consumer Research.
“The frequent turnover of economic policies makes it extremely difficult for consumers to plan for the future, regardless of their policy preferences.”
Michigan's consumer sentiment index, which is closely monitored on Wall Street, has fallen for the third consecutive month since January, falling 22% since 2024.
HSU said the decline in consumer confidence was widespread across the US age, income, education, demographics and regions.
Trust in the economy's future has also declined among political groups, HSU added that there is a significant shift from the growth trends in partisan influence on economic sentiment.
Despite the surge in sentiment after Trump's election, economic expectations among Republicans fell 10% in March, HSU noted. Independences reported a 12% decline, while economic expectations plummeted 24% among Democrats.
The Michigan findings are the latest red flag for Trump to advance his aggressive tariff agenda despite growing concerns among economists and policymakers.
Trump imposed a 25% import tax on goods from Canada and Mexico this month, but has delayed many of these new tariffs over the past two weeks. New tariffs on the president's steel and aluminum are also in place, sparking another trade battle with the European Union.
Trump on Thursday threatened to impose 200% tariffs on wine, champagne and other alcohol if the EU does not revoke the new import tax on US whiskey.
The EU is set to allow expired tariffs on US goods imposed by the bloc during its final trade war with Trump. I'll be back on April 1st. The EU is also planning to impose new tariffs on $28 billion in US goods by mid-April.
Trump is also to impose mutual tariffs on foreign goods from countries that impose similar obligations on US products.
Trump's escalating trade war is expected by economists to raise the costs of key commodities, including food, energy and clothing, as Americans try to recover from years of high inflation.
Retaliation fees for US goods are also expected to hit American farmers who lost billions of dollars in sales during the first trade war between China and the EU.
The potential costs of tariffs and Trump's frequent changes have surprised business leaders who said constant uncertainty about trade policy has made long-term planning difficult.
“If consumer sentiment continues to be sour, spending can make it lower and the economy can be hit harder,” wrote Bill Adams, chief economist at Comerica Bank in an analysis on Friday.
“And if consumer confidence is plunging, and inflation expectations are rising at the same time, don't hold your breath to get on the rescue.”
Consumer inflation expectations skyrocketed in March, with annual inflation forecasts rising from 4.3% to 4.9%, the best reading since 2022.
Furthermore, long-term inflation expectations have skyrocketed from 3.5% to 3.9%, the sharpest month increase since 1993.
Rising inflation expectations could be a major concern for the Fed as they plan to cut further interest rates this year.
The Fed is to lower interest rates from the peak set during the fight against inflation. However, prices can be high caused by tariffs or concerns about them, preventing the Fed from easing pressure on the soft economy.
Amid weeks of decline in stock prices, the Trump administration tried to reassure Americans on its agenda, suppressing fears of the recession.
The president and his top economic staff argue that the economy is undergoing a transitional period towards a stronger domestic job market and US manufacturing.
“Our economy will be booming like never before!” Trump I wrote about the true societyhis social media platform, Friday morning.
Trump and Republicans also denounced the Biden administration and Democrats for the current state of the economy, and the job market improved in 2024, even after inflation was eased.
Heather Boohee, a member of Biden's White House Economic Advisors Council, has regained responsibility with his successor.
“In just a few weeks, the Trump administration has Elon Musk in the driver's seat, allowing Americans to drop their expectations sharply.
