Retail Sales Slow Amid Tariff-Driven Spending Surge/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. retail sales stagnated in April following a sharp rise in March, as Americans rushed to shop before new tariffs hit. Retailers now face uncertainty despite temporary tariff reductions. Economists warn that inflation and cautious spending could hamper economic growth.
Retail Sales Slow Amid Tariff-Driven Spending Surge: Quick Looks
- Retail sales rose only 0.1% in April after a 1.7% surge in March, driven by pre-tariff purchases.
- Tariff policies from the Trump administration have disrupted consumer trends and business forecasts.
- Major price increases are expected, especially during the back-to-school and holiday shopping seasons.
- Sales at key retailers like sporting goods and clothing stores declined, while restaurants and garden centers saw gains.
- Average U.S. tariffs have risen to 15%, the highest since the 1930s.
- Temporary tariff rollbacks have resumed shipping flows, but businesses remain wary of more economic shocks.
- Small businesses like Jilly Bing face rising costs, uncertain pricing, and production delays.
Retail Sales Slow Amid Tariff-Driven Spending Surge
Deep Look
Retail sales in the U.S. slowed sharply in April 2025 following a dramatic surge in March, according to a new Commerce Department report released Thursday. April’s modest 0.1% increase in sales compared to the previous month’s 1.7% spike underscores how American consumers accelerated their spending ahead of newly imposed tariffs, only to ease back once the duties went into effect.
The economic landscape has been disrupted by President Trump’s fluctuating tariff policies, particularly the recent 25% tax on imported automobiles that took hold earlier this month. That uncertainty has prompted many companies to abandon traditional revenue and earnings forecasts for the year.
With consumers now expressing gloomier views on the economy, sentiment surveys suggest a cautious outlook, although it remains unclear if this will lead to further reductions in spending. Economists are increasingly forecasting a spending slowdown as tariffs—including a sweeping 10% duty on all imports—begin to filter into final retail prices.
“The April data indicates that consumers paused after rushing purchases in March,” said Lydia Boussour, a senior economist at EY-Parthenon. “As inflation picks up and interest rates remain high, expect more careful spending behavior going forward.”
At present, the average U.S. tariff rate has surged to approximately 15%—a level unseen since the Great Depression era. These tariffs are already driving up prices, with Walmart, the nation’s largest retailer, reporting higher costs hitting shelves by late April. Walmart CFO John David Rainey noted that the pressure on prices will grow even more intense during the summer back-to-school season.
CEO Doug McMillon acknowledged the challenge: “We’ll try to keep prices low, but our margins are thin, and the tariffs—even at lower levels—make that very difficult.”
April’s sales figures reflect these pressures. Sporting goods stores saw a steep 2.5% drop in sales, which coincided with significant price hikes. Clothing stores posted a 0.4% decline, while health and personal care retailers saw a 0.2% dip. Auto dealers also experienced a minor 0.1% slide. Even gas stations saw sales fall by 0.5%, despite a slight decrease in fuel prices.
Not all segments struggled. Spending at bars and restaurants jumped 1.2%, indicating consumers are still willing to indulge in discretionary spending. Home improvement stores also saw a boost, with a 0.8% increase in sales—the highest since 2022—as more homeowners invest in renovations due to stagnant home buying caused by high mortgage rates.
Last month, Trump sharply increased tariffs on Chinese imports, prompting recession fears and the potential for product shortages during the holiday season. However, the situation shifted this week after the U.S. and China agreed to temporarily scale back tariffs—reducing U.S. duties from 145% to 30% and China’s retaliatory tariffs from 125% to 10%.
Retailers and importers had largely paused shipments of goods like shoes, toys, and clothing during the height of the trade tensions. With tariffs now temporarily lowered, supply chains are beginning to move again, but logistical challenges remain. Shipping and freight costs are expected to rise amid fierce competition for container space.
For small businesses, the situation is especially precarious. Elenor Mak, founder of doll maker Jilly Bing, is struggling with pricing and production timelines. Though she’s relieved by the tariff rollback, her company still faces cost increases across freight, testing, and manufacturing.
Mak, who produces dolls in China, said: “Before tariffs, we sold at $68. Now, if we raise prices 30%, how do we explain that to customers? We weren’t going to restock—but now we might—and the costs are still rising.”
The path forward remains murky. With inflation expected to accelerate and consumer confidence waning, the economy faces more turbulence. Retailers must navigate an unpredictable trade environment while trying to meet customer expectations and manage shrinking profit margins.
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