The landscape: Since President Donald Trump took office, the only constant has been uncertainty. A flurry of tariffs—threatened, adjusted, and implemented—has created a volatile environment for brands and retailers trying to plan ahead (we’re helping you keep track of the rapid-fire changes via a live FAQ document).

• Now, attention turns to Wednesday, April 2, which Trump has dubbed “Liberation Day”—when the US will impose dollar-for-dollar reciprocal tariffs on nations that tax American goods.
• What that means remains unclear. Trump has alternately suggested he “may give a lot of countries breaks” and that “all countries” could be affected. Even top officials appear unsure. National Economic Council Director Kevin Hassett told Fox News, “I can't give you any forward-looking guidance on what's going to happen this week.”

That uncertainty is putting stress on companies and consumers as they weigh whether to spend or save.

Near-term headwinds: The economic ripple effects are touching sectors central to daily life.

• Food inflation may accelerate as Trump moves to impose tariffs on “external” agricultural products.
• Alcohol prices could spike, with craft breweries warning of hikes up to 50% due to rising costs for barley, malt, aluminum, and steel. Imports like tequila and Canadian whisky are also expected to become more expensive.
• Energy costs may climb if the US enacts “secondary tariffs” on Russian and Venezuelan oil—duties that would extend beyond direct imports to products from any country sourcing oil from those nations.
• Auto prices are likely to rise as 25% tariffs on imported vehicles and parts take effect in April and May. Though targeting foreign automakers, the policy could also squeeze US manufacturers due to deeply integrated North American supply chains.

Prices could surge even further as countries such as China, Japan, and South Korea band together to respond to US tariffs.

Our take: The Trump administration’s tariff policies are fueling economic disruption and a sharp shift in sentiment.

• Consumer confidence has dropped more than 30% since November, according to the University of Michigan, amid fears of stagflation—a toxic mix of rising prices and unemployment. Business sentiment is also waning: The Q1 2025 “CFO Survey” from Duke University and the Federal Reserve Banks of Richmond and Atlanta shows that much of the post-election optimism among finance leaders has faded.
• With consumers and companies alike pulling back, Goldman Sachs has raised the probability of a 2025 US recession to 35%.

We currently forecast US retail sales to grow 2.9% this year. But that outlook hinges on how—and how quickly—the Trump administration’s tariff agenda takes shape. If fully implemented, we may revise projections downward to account for a likely drag on spending.