Tariffs dent confidence
Tariff uncertainty is starting to show up in households and markets: U.S. consumer sentiment fell to its worst reading in about 50 years while the S&P 500 briefly slipped into correction territory in April. ( ) Reports link the market wobble partly to tariff policy, noting that hopes for a 90‑day tariff pause eased the sell‑off but volatility remains elevated. (webanditnews.com)
U.S. households are turning sharply more cautious as tariffs, higher prices and market swings cloud the economic outlook. (sca.isr.umich.edu) The University of Michigan’s consumer sentiment index fell to 53.3 in March 2026 from 56.6 in February, and the survey’s director said confidence dropped across age groups and political parties. (sca.isr.umich.edu) That survey also showed the expectations index at 51.7 in March, down 8.7% from February, while respondents with higher incomes and stock holdings were hit by volatile markets and rising gasoline prices. (sca.isr.umich.edu) On Wall Street, the Standard and Poor’s 500 ended April 10 at 6,816.89, down 0.1% for the day but up 3.6% for the week, a sign that trading has stayed choppy even after a relief rally. (seattlepi.com) A tariff is a tax on imports, and the Trump administration’s April 2, 2025 executive order imposed a 10% baseline reciprocal tariff on nearly all trading partners under emergency powers. (federalregister.gov) A second order on April 9, 2025 paused the higher country-specific rates for 90 days for most countries, except China, and kept a 10% added duty in place during the pause. (federalregister.gov) Researchers are now finding that those tariffs are showing up in consumer prices. A Federal Reserve note published April 8 said 2025 tariffs led to statistically significant price increases in consumer goods that were more exposed to tariffs. (federalreserve.gov) The Budget Lab at Yale estimated the 2025 tariffs raised $214.7 billion in inflation-adjusted customs revenue above the 2022-2024 average by February 2026, with the effective tariff rate reaching 10.6% in January 2026. Its April 1 update also said imported core goods and durable-goods prices each rose 1.5% during 2025 through January. (budgetlab.yale.edu) Households have started to reflect that pressure in their own forecasts. The New York Federal Reserve said on April 7 that one-year inflation expectations rose to 3.4% in March, while expected gasoline-price growth jumped to 9.4%, the highest reading since March 2022. (newyorkfed.org) Investors are still paying up for protection against more swings. The Chicago Board Options Exchange Volatility Index, or VIX, tracks expected near-term stock-market turbulence through options prices, and Federal Reserve data show it remained elevated into early April. (fred.stlouisfed.org) The next test is whether falling confidence stays confined to surveys or starts to show up in spending, hiring and earnings. For now, the data show households, companies and traders all reacting to the same thing: import taxes that were meant to pressure trading partners are also feeding uncertainty at home. (sca.isr.umich.edu; federalreserve.gov)
