WASHINGTON (AP) — U.S. consumers spent slightly more at retail stores last month after ramping up their shopping in March to get ahead of
tariffs
.
Sales at retail stores and restaurants rose just 0.1% in April from March, the Commerce Department
said Thursday
. That is much lower than the previous month’s 1.7% gain, which reflected a surge in car sales as consumers accelerated purchases ahead of President Trump’s 25% duty on auto imports that went into effect this month.
Last month’s tiny increase after the March surge makes it harder to get a clear read on consumer spending trends and reflects the ongoing turmoil and uncertainty in the economy in the wake of Trump’s
stop-and-go tariff policies
. Many publicly-traded companies have withdrawn or held off on the
traditional practice
Of predicting their revenues and earnings for the remainder of this year due to the highly unpredictable economic environment.
Meanwhile, Americans are increasingly gloomy about the economy’s prospects, according to
sentiment surveys
, but it’s not yet evident whether that will translate into reduced spending and slower economic growth.
Yet many economists expect consumers will slow their spending in the coming months, as Trump’s tariffs — including 10% duties on all imports — work their way through the supply chain to products on store shelves.
Thursday’s report “suggests that consumers pulled back after a rush to front-run tariffs,” Lydia Boussour, senior economist at consulting firm EY-Parthenon, said in an email. “Looking ahead, consumers will continue to be more selective and cautious with their spending as inflation reaccelerates and interest rates remain elevated.”
In total, economists approximate that average U.S. tariffs currently stand at approximately 15%, marking their peak level since the 1930s, which could lead to increased pricing over the next few months.
Those price hikes have already begun to appear.
Increased prices began to show up on Walmart shelves in late April and then accelerated this month, but shoppers will feel the biggest impact starting in June and July when the back-to-school shopping season kicks in, said Chief Financial Officer John David Rainey told The Associated Press.
On a call to discuss quarterly earnings Thursday, CEO said that Walmart would do the best it could to keep prices low, “But given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure given the reality of narrow retail margins.”
In April, sales were flat or down for many retailers, the government said: They plunged 2.5% at sporting goods stores, which saw prices jump last month, according to the government’s inflation report earlier this week. Sales dropped 0.4% at clothing stores, while they ticked down 0.2% at health and personal care stores and slipped 0.1% at auto dealers.
Gas station sales dropped 0.5%, even as prices declined 0.1%. The figures aren’t adjusted for price changes.
Nevertheless, indications suggested that certain Americans remained inclined to make purchases. Restaurant and bar sales experienced a robust increase of 1.2% in the previous month, indicating that numerous consumers enhanced their non-essential expenditures.
And sales at home and garden centers jumped 0.8%, the biggest gain since 2022, which suggests Americans are pursuing more home renovations as elevated mortgage rates cooled home sales.
Trump imposed sky-high tariffs on imports from China last month that fueled fears of a recession, higher inflation, and even the specter of empty shelves by the winter holidays. But on Monday the U.S. and China
announced a deal
that sharply reduced the duties, partly assuaging those concerns.
Retailers still face a lot of uncertainty around tariffs and how shoppers will react to higher prices after several years of sharply rising costs.
A governmental document, published on Tuesday, revealed that
inflation cooled
for the third straight month in April, though economists and many business owners expect inflation will climb by this summer.
Trump had imposed massive 145% import taxes on Chinese goods last month, thought they were reduced to 30% for the next 90 days. China reduced its retaliatory duties to 10% from 125%.
Retailers and importers had largely stopped shipping shoes, clothes, toys, and other items when the duties were so high, raising worries about empty shelves for the key back-to-school and holiday seasons. But many are now scrambling to resume shipping their goods from China while there is a pause in the trade war.
Although numerous retailers and suppliers feel relief due to the lowered tariffs, they continue to encounter significant challenges. One major issue is preparing for increased expenses related to shipping and freight, as competition intensifies to secure space on cargo vessels.
San Francisco resident Elenor Mak, whose company Jilly Bing manufactures Asian American dolls in China, said she feels some relief that she has a more realistic path forward but the challenges are far from over.
Mak is communicating with her manufacturers to determine if her dolls can be made in time for the winter holidays; however, she worries that as a small business, she might end up towards the bottom of their priority list. Additionally, she’s uncertain about setting prices for her products and anticipates potential hikes in various expenses, including third-party inspection charges and shipping fees.
Prior to the tariff conflicts, her dolls typically sold for around $68. She is concerned about conveying mixed signals to customers: “How can you say: ‘We were not planning to restock—but maybe we will—and it may be 30% pricier?’” she questioned. “Despite our efforts to strategize, we’re still dealing with many uncertainties.”
_____
D’Innocenzio reported from New York City.
Christopher Rugaber And Anne D’innocenzio, The Associated Press
