US Economy Faces Potential 'Double Whammy' As Trump Tariffs Hit

President Donald Trump‘s tariffs may lead to a resurgence in inflation and further declines in consumer confidence, one expert has warned.

According to John Shea, founder and CEO of digital retail consultancy Momentum Commerce, the U.S. economy now faces the “double whammy” of rising prices and a drop in consumer spending as a result of the president’s trade policies.

“We’re seeing evidence that consumers are starting to trade down,” Shea told the Financial Times, “while at the same time prices are creeping up.”

Why It Matters

The White House has argued that the tariffs will undo decades of trade imbalances and generate significant tax revenue, while acknowledging the possibility of short-term disruptions to the U.S. economy.

Economists, however, have raised concerns over both higher prices and weaker growth as a result of the tariffs, a sentiment recent polls show has spread to American consumers.

What To Know

Andrew Waber, director of market research at Momentum Commerce, told Newsweek that the firm studied the average selling price across Amazon‘s top 1,000 products over the past year, and found that “in aggregate, Amazon consumers are reaching for less expensive products more often than they were one year ago.”

“There have now been four consecutive weeks of the 1,000 most popular products on Amazon being less expensive year-over-year,” Waber said. “In fact, the week of April 14 saw the greatest year-over-year decline in ASP [average selling price] at -2.3%.”

Waber told Newsweek that this is a “clear evidence that U.S. consumers are trimming their spending, with lower-priced products becoming increasingly popular.”

Consumer spending is estimated to account for over two-thirds of America’s gross domestic product, and economists previously told Newsweek that measures of consumer confidence serve as one of the key barometers for the health of a nation’s economy.

However, recent reports on consumer confidence have revealed Americans’ increasing concerns over the country’s economic outlook.

According to the Conference Board’s most recent survey, consumer confidence dropped 7.2 points between February and March, marking the fourth consecutive monthly decline and the lowest reading since January 2021.

The survey was conducted prior to Trump’s “Liberation Day” tariff announcements, and surveys released last week point to similar concerns.

The University of Michigan’s Consumer sentiment report for April revealed an 8.4-percent drop in March, with the Consumer Expectations index falling 10.1 percent, capping off the steepest three-month decline since the 1990s recession. Year-ahead inflation expectations, meanwhile, jumped to 6.5 percent in April from 5 percent in March, reaching their highest level since 1981.

Joanne Hsu, the University of Michigan’s Surveys of Consumers director, said that consumers’ perceptions were largely influenced by “ongoing uncertainty around trade policy and the potential for a resurgence of inflation looming ahead.”

While polls reveal that concerns over the impact of tariffs are shared by the majority of Americans, there is a clear partisan split on the tariffs and how long their impacts will be felt.

A recent AP-NORC survey conducted between April 12 and 21 found that only 37 percent of Americans supported Trump’s handling of the economy—with 72 percent of Republicans in favor compared to only 12 percent of Democrats.

A HarrisX survey of 1,850 voters conducted between April 4 and 7 revealed that both Democrats (84 percent) and Republicans (62 percent) anticipate consumer prices rising as a result of the tariffs.

Some 71 percent believe the tariffs will cause a short-term recession, a view held by 86 percent of Democrats and 60 percent of Republicans. Long term, however, 76 percent of Republicans believe the tariffs will result in economic growth, with 75 percent of Democrats anticipating the opposite.

What People Are Saying

Daire Burke, head of business financing platform Swoop Funding North America, told Newsweek: “By almost all measures, U.S. consumer confidence has dropped 10-20 percent since Liberation Day.”

He added that among Republicans “there is widespread support for using tariffs to balance what is perceived as an unfair trade imbalance which the US has developed with most parts of the world, particularly China.”

Andrew Weber of Momentum Commerce told Newsweek that consumers increasingly turning to lower-priced products “presents massive challenges to many brands in terms of pricing their products so they can retain a desired margin while still appealing to consumers in a way that captures market share.”

“On the flip side, budget and entry-level brands are going to be more appealing and stand to benefit in this environment,” he added.

Treasury Secretary Scott Bessent, responding to a poll showing 72 percent of Americans were “very” or “extremely” worried about the possibility of a recession, told ABC News: “What I do know is that Americans are behaving very different than what the surveys say. So the surveys may say that, but consumers are still spending. So I prefer to look at what Americans are doing rather than how they’re answering pollsters.”

Dritan Nesho, CEO and chief pollster at HarrisX, said: “Americans are worried about what tariffs will mean for their wallets in the near term, but there’s still hope among many that this policy could pay off in the long run. The data highlights both economic anxiety and a belief in the strategic leverage of tariffs, although that is shrinking.”

What Happens Next?

President Trump has put a 90-day pause on reciprocal tariffs for all nations besides China, whose imports now face a 145 percent tariff upon entering the U.S.