Trump's tariffs slow economic growth in the US and beyond
- Consumer sentiment in the US dropped by 10.5% in March, marking the lowest level since late 2022.
- Tariff policies implemented by President Donald Trump are causing inflation concerns and hindering economic growth both domestically and globally.
- The combination of tariffs and consumer uncertainty threatens to prolong economic challenges and diminishes consumer confidence across political lines.
In March 2025, consumer sentiment plummeted to its lowest level since November 2022, representing a drop of 10.5% from February, according to the University of Michigan's Survey of Consumers. The survey's mid-month reading stood at 57.9, below expectations. This decline reflects growing concerns over inflation and a volatile stock market, as many consumers reported feeling uncertain about economic policies. Critically, the enforcement of tariffs by President Donald Trump on trading partners has exacerbated these inflation fears, leading consumers across political affiliations to express weakened outlooks for the future. The Organisation for Economic Co-operation and Development (OECD) highlighted that Trump's tariff policies not only slow down economic growth in the United States but also have detrimental impacts on the global economy, potentially resulting in greater inflation. With new duties on key imports like aluminum and steel, and threats of substantial tariffs on European Union products, uncertainty has risen globally, impacting business investments. The OECD forecasts a slow increase of U.S. inflation this year, suggesting prices will rise to 2.8% by 2025, compared to 2.5% last year. As the U.S. economy is anticipated to grow slowly at rates of 2.2% in 2025 and a mere 1.6% in 2026, neighboring economies, particularly Canada and Mexico, are poised to fare even worse amidst escalating trade tensions. Canada’s expected growth is estimated at just 0.7% for the coming years, while Mexico's economy is projected to shrink significantly. This downturn reflects a broader worldwide economic struggle exacerbated by trade policy and tariffs. The overall picture suggests that with tariffs remaining in place and the associated uncertainties, not only U.S. economic growth will continue to falter, but global activity will also face considerable challenges. Consumers reflect this anxiety, leading to diminished sentiment as they confront the realities created by fluctuating policies. Joanne Hsu, the survey's director, noted that consumers from all political backgrounds perceive a worrying outlook, indicating that the sentiment slump is widespread and not isolated to specific groups.