U.S. consumers spent slightly more at retail stores last month after ramping up their shopping in March to get ahead of tariffs.
Retail and restaurant sales rose 0.1% in April from March, the Commerce Department said Thursday. That was a sharp drop from the previous month’s 1.7% gain, which reflected a surge in car sales as consumers rushed to make purchases ahead of President Trump’s 25% duty on auto imports that took effect this month.
April’s modest increase, following March’s surge, makes it harder to read consumer spending trends and reflects ongoing economic uncertainty linked to Trump’s stop-and-go tariff policies. Many publicly traded companies have paused or withdrawn earnings guidance, citing an increasingly chaotic business landscape.
Meanwhile, sentiment surveys show Americans are growing more pessimistic about the economy, though that hasn’t yet translated into weaker consumer spending or slower growth.
Still, many economists expect spending to cool in the months ahead as Trump’s tariffs — including 10% duties on all imports — filter through supply chains and raise shelf prices.
“Thursday’s report suggests that consumers pulled back after a rush to front-run tariffs,” Lydia Boussour, senior economist at 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.”
Economists estimate average U.S. tariffs are now about 15% — the highest since the 1930s — and are likely to push prices higher in coming months.
Those increases are already being felt.
Prices began rising on Walmart shelves in late April and have accelerated this month. Shoppers are expected to feel the biggest impact in June and July, when the back-to-school season begins, Walmart CFO John David Rainey told The Associated Press.
On a Thursday earnings call, the CEO said the company is doing what it can 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, retail performance was mixed. Sales plunged 2.5% at sporting goods stores, where prices also rose last month, according to recent inflation data. Sales fell 0.4% at clothing stores, dipped 0.2% at health and personal care stores, and slipped 0.1% at auto dealers.
Gas station sales dropped 0.5% even as prices fell 0.1%. The figures are not adjusted for inflation.
Still, there were signs of resilient consumer activity. Sales at restaurants and bars rose 1.2%, suggesting continued discretionary spending. Sales at home and garden centres jumped 0.8% — the biggest monthly increase since 2022 — as Americans invest in home improvements amid slower home sales caused by high mortgage rates.
Trump imposed sweeping tariffs on Chinese imports last month, sparking fears of recession, higher inflation and even potential shortages during the holiday season. But on Monday, the U.S. and China announced a deal to significantly reduce those duties, easing some concerns.
Retailers still face uncertainty around how shoppers will respond to lingering price hikes after years of elevated inflation.
A government report Tuesday showed inflation cooled for a third consecutive month in April, though economists and business owners expect it to rise again this summer.
Trump had initially imposed 145% tariffs on Chinese goods, though those were lowered to 30% for a 90-day period. China responded by reducing its retaliatory duties to 10% from 125%.
While the higher duties led many retailers and importers to halt shipments of items like shoes, toys and apparel, fears of empty shelves for back-to-school and holiday seasons are prompting many to resume orders while trade tensions are paused.
Still, retailers face other challenges, including rising freight and shipping costs as competition heats up for limited cargo space.
Elenor Mak, a San Francisco resident and founder of Jilly Bing — a company that makes Asian American dolls in China — said she feels some relief, but uncertainty remains.
Mak is in talks with factories to get her dolls produced in time for the holidays, but she worries she may fall to the back of the production line as a small business. She’s also unsure how to price her products amid rising costs, from third-party testing to shipping.
Before the tariff wars, her dolls sold for an average of US$68. Now, she’s concerned about confusing customers.
“How do you explain: ‘We weren’t going to restock — but now we might — and it could cost 30% more?’” she said. “We’re doing our best to plan, but we’re still navigating a lot of unknowns.”