WSJ Your Money Briefing - How Trump’s Tariff Whiplash Is Spooking Consumers

Episode Date: March 12, 2025

Uncertainty surrounding Trump’s trade war is weighing on consumers. Wall Street Journal reporter Rachel Louise Ensign joins host Ariana Aspuru to discuss how consumers are responding to tariffs and the potential impact on economic growth.  Sign up for the WSJ's free Markets A.M. newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Here's your money briefing for Wednesday, March 12th. I'm Arianna Aspuru for The Wall Street Journal. March 12th. I'm Mariana Aspuru for The Wall Street Journal. Uncertainty around President Trump's trade war and rapidly changing tariff news is starting to spook consumers. There are a good number of people who are holding off on big ticket purchases because they're so uncertain. Some of it is about the cost of the actual good, but it's more just the sense of unease and that if you're really worried about things, you should just batten down the hatches

financially. We'll talk to Wall Street Journal reporter Rachel Louise Ensign about how this uncertainty could weigh on economic growth. That's after the break. Uber Eats. I'm there for zero dollar delivery fee on cheeseburgers, up to five percent off smoothies and five percent Uber credits back on rides. Just to be clear, I'm there for savings, not whatever you think university is for. Get Uber One for Students, a membership to save on Uber and Uber Eats. With deals this good, everyone wants to be a student. Join for just $4.99 a month. Savings may vary. Eligibility and member terms apply. $4.99 a month. Savings may vary. Eligibility and member terms apply. President Trump's recent tariffs on China, Canada, and Mexico have caused some consumers to hold back on purchases. Wall Street Journal reporter Rachel Louise Ensign joins me. Rachel, we saw a whiplash with the Trump administration's levies on trade.

Catch me up on where the tariffs stand right now. So Trump has gone back and forth on tariffs a lot since he took office. Obviously on the campaign trail, he threatened these huge tariffs. Then right when he took office, was saying they were going to have to put a one month hold on the Mexico and Canada tariffs, which were pretty significant. And then last week, we had the same go around again, where he allowed the Mexico and Canada tariffs to go into effect, which basically would increase the cost of goods from those two countries for Americans, and also put some new tariffs on China. But then days later, last week, there was an agreement to again pause some of the Mexico and Canada tariffs. So basically, this has just been back and forth, there's a lot of uncertainty. And what we're seeing is really starting to unsettle

a certain group of US consumers. I want to get into that population of consumers that you were mentioning, but first, how have the countries responded to the tariffs so far? This has been a huge deal here. It's a huge deal in Canada, a huge deal in Mexico. And they have responded saying that if we wind up doing those big tariffs that they're going to also slap tariffs on US goods. And this has left Americans unsure of what their next car, phone or grocery chip might cost them. How is this impacting their spending?

So what we saw in January was that people were already starting to get a little bit concerned and cut back on spending. If you look at consumer sentiment, it's very closely tied to your political affiliation. And people who are Democrats and independents too to some extent, but Democrats most strongly are really nervous about Trump and that is affecting it in a very major way how they feel about the economy. They're cutting back on their spending, delaying major purchases, and Democrats are a big share of the population and so that does affect the broader economy. In your story you speak to some people who are holding off on their spending. What did they say?

Yeah, we talked to a few people and there are a good number of people who are holding off on big ticket purchases because they're so uncertain. Some of it is about the cost of the actual good, but it's more just the sense of unease and that if you're really worried about things, you should just batten down the hatches financially and save as much as possible. And in addition, you look at the way that the markets have been reacting over Monday morning. Trump declined to rule out that there would be a recession and the markets responded pretty poorly to that.

So these people, especially affluent people who had been feeling really good about their finances because the stock market's been up so much in recent years, they're looking at that and it's making them nervous. And how's this nervousness, uneasiness, affecting the broader economy? This is all just starting to show up in the numbers. Obviously, the numbers are a little bit of

a lag. So we're looking at January and February data. So it will be really interesting to see if that continues or accelerates. And sentiment dropped a lot that was driven a lot by how Democrats are feeling. But look, there's other economic data that is just chugging along. The jobs report that came out on Friday was seen as solid, but at the same time I don't think that the full effect of all of the federal job cuts that have happened so far was seen in that report. When we're talking about prices possibly increasing because of tariffs in the next few weeks or

months, are these prices likely to come down once they do increase? I think the jury's out probably on, you know, if an avocado importer has to raise prices 25% to match tariffs, but then the tariffs go away, will they cut the prices? It definitely is possible. But one of the things that we've seen with the really high inflation over the last few years is that prices go up a lot, but then they don't really come down. And people hate that. Economists might say, wow, inflation is not that high. But basically, that just means that the prices are much higher

than they were in like 2020. But they aren't as increasing as much. So in general, people aren't expecting deflation, which would be the prices actually going down. That might happen on individual goods. It's not necessarily clear. What key factors should investors and consumers pay attention to in the coming weeks? Key economic data, jobs, economic growth, and then consumer spending. It would really be worth continuing to keep an eye on that because it's pretty remarkable

how the uncertainty is starting to affect consumers. It might just be Democrats and people who don't like what Trump is doing and all of Trump's supporters are feeling fine and spending normally, but that's still a significant share of the economy that we're talking about. That's WSG reporter Rachel Louise Ensign. And that's it for your money briefing. I'm Arianna Aspuru for The Wall Street Journal. This episode was produced by me with supervising producer Melanie Roy.

Thanks for watching!