Economists warn that the uncertainty stemming from President Trump’s looming tariffs on Canada and Mexico, alongside significant job cuts, is creating a “chilling” atmosphere for the U.S. economy. Rachel Ziemba, an expert from the Center for a New American Security, explains that this unpredictability hampers businesses’ abilities to plan their costs, leading them to hold back on investments which ultimately stifles growth.
Currently, Trump has enacted a 10% tariff on Chinese goods, with plans for additional tariffs of 10% and 25% specifically targeting Canada and Mexico. He has also suggested imposing reciprocal tariffs that mirror those of other nations which adds to the economic fog. The potential rise in factory input costs by 25% could lead to production cuts and job losses, threatening consumer confidence and spending.
Moreover, the recent reduction of the federal workforce contributes to this climate of fear. The Department of Government Efficiency’s measures leave many workers uncertain about their job security, prompting them to save rather than spend. This has dire ramifications on consumption and overall economic health.
A recent consumer sentiment survey by The Conference Board indicated a drastic drop, marking the largest downturn since August 2021. Senior economist Stephanie Guichard noted a significant rise in pessimism regarding job prospects, leading many consumers to brace for economic hardship.
Inflation expectations have similarly surged, with figures jumping from 5.2% to 6% in February, largely due to rising prices for essential goods influenced by tariff discussions. Much is at stake as tariffs on imports from our primary trading partners could inflate grocery and fuel prices, and raise car costs considerably, as pointed out by Ziemba. She describes the prospect of additional tariffs on car parts as potentially burdensome, leading to higher home-building costs as well.
Economists indicate that President Trump’s tariff threats and government job cuts are dampening the U.S. economy, creating uncertainty that inhibits business investment and consumer spending. With upcoming tariffs potentially raising costs significantly, overall economic pessimism has surged, impacting consumer confidence and inflation expectations.
In summary, the economic landscape is becoming increasingly precarious due to tariff threats and layoffs affecting consumer confidence and business investment. The potential for rising costs in everyday goods due to these tariffs is alarming. Ultimately, the intertwined fates of tariffs and job security present crucial challenges that could stifle the economy if not addressed.
Original Source: abcnews.go.com
