The situation: The Trump administration’s evolving tariff policies are starting to hit home—impacting both the psyche and behaviors of businesses and consumers.

• Consumers are showing clear signs of concern. Forty-six percent of consumers worry about rising fashion and clothing prices due to tariffs, and over half say they’re willing to switch brands based on price, per a mid-April survey by Wunderkind.
• Spending behavior is already shifting. Twenty-three percent of shoppers have started cutting back on nonessential purchases—even before most price increases have appeared on shelves. More ominously, 37% plan to reduce spending during the summer and holiday periods.
• Small businesses are growing more pessimistic. The NFIB Small Business Optimism Index fell 1.6 points in April, the second straight month below its 51-year average. The share of owners expecting better business conditions dropped 6 points from March, the lowest since last October.
• Business owners are bracing for headwinds. The net percentage expecting higher real sales volumes declined for the fourth consecutive month, down 4 points in April. The share planning to boost inventory investments fell 3 points to an 11-month low.

A challenging environment: Even as the Trump administration seeks an off-ramp from its most extreme trade measures, companies still face major obstacles. Significant tariffs—unprecedented by modern standards—remain in place, squeezing margins and obscuring demand forecasts. The result is an increasingly unpredictable operating environment for businesses.

At the Port of Los Angeles, May imports are expected to drop 25% YoY, as companies paused orders after frontloading inventory, per The Wall Street Journal. Executive director Gene Seroka said demand is unlikely to rebound soon, as a 30% duty on Chinese imports continues to pressure margins.

Several retail companies are already feeling the pressure:

• American Eagle Outfitters became the latest retailer to cite macroeconomic uncertainty as it withdrew its financial guidance. Preliminary Q1 results show a 3% YoY decline in comparable sales, a 5% drop in overall sales, and $75 million in write-offs tied to unsold spring and summer merchandise.
• QVC Group reported a 10% YoY revenue decline. CEO David Rawlinson said customers are “heavily distracted by current events,” and CFO Bill Wafford warned that tariffs could further weaken demand if they persist.
• Simon Property Group reported that tariffs led one European retailer to cancel four deals due to rising import costs. The company warned that the greater risk lies with retailers heavily reliant on China, who may no longer be able to make their margins viable under current trade conditions.