President Trump says “tariff” is the “most beautiful word” he knows. Many Americans wish it were banned from the language.
Trump’s imposed and threatened tariffs on imports have pounded consumers’ attitudes about the economy, as Americans brace for soaring prices, product shortages, and worse. Tariffs are an arcane throwback to old-timey economies that predate air travel and computer chips. Yet Americans get the gist, and they’re increasingly alarmed.
The University of Michigan consumer sentiment index for April hit its lowest level since the middle of 2022, when the inflation that vexed Joe Biden’s presidency was at its peak. Back then, inflation was nearly 9% and gasoline was close to $5 per gallon. The rising cost of food, rent, and many everyday things enraged consumers and sent President Biden’s approval rating to its lowest level until that point. It never recovered.
Trump, inexplicably, is replaying the Biden inflation story as if he’ll end up with a better outcome. Trump inherited relatively low inflation, with year-over-year price gains of 3% when he took office in January and just 2.4% in March, the latest reading.
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But those are pre-tariff numbers, and they’re not what most Americans are focusing on. Instead, they’re preparing for price and supply shocks that are likely to begin in a few months as Trump’s import tariffs careen through the economy.
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Trump has raised the average tax on $3 trillion worth of imports from a low 2.5% when he took office to a hefty 27%. If import purchases stayed the same, that would be a tax hike on American businesses and consumers of more than $700 billion.
But the tariffs on some imports, especially those from China, are so high that they’ll distort markets and change the whole flow of products. Trump’s tariff of 145% on most Chinese imports is so prohibitive that cargo ships aren’t even docking because importers can’t or won’t pay such a high tax. If this goes on, the inevitable result will be shortages of clothing, electronics, pharmaceuticals, and many other products by summer or fall, along with higher prices for the stuff that passes through or avoids Trump’s tariff dragnet.
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Consumers haven’t pulled back on spending yet. In fact, they may be stocking up in anticipation of higher prices later. But they clearly see a shock coming. In the Michigan survey, respondents said they expect the inflation rate in 12 months to be 6.5%. That’s the highest inflation outlook since 1981. During the worst of Bidenflation, the one-year inflation outlook only got as high as 5.4%. Americans are expecting worse inflation under Trump than they did under Biden.
