Cnn
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The health of the American economy is looking less and less stable for the day.
Departures are increasing. Consumer expenses – the spine of the economy – it suddenly collapsed in January. Consumer confidence is immersed. A main prediction of GDP suddenly returned negatively. And extreme fear is back to Wall Street as shares slide.
Despite the dark appearance, President Donald Trump continues to inject chaos into the economy with almost ongoing tariff threats.
Now he is just hours away from lobbying tariffs not only one or two, but all three of America’s largest trading partners.
Starting Tuesday, Trump has pledged to impose a 25% fee for goods imported from Mexico and Canada, and to double the tariffs for those from China to 20%.
These tariffs – if they are imposed – can increase costs for Americans at a time when inflation remains stubborn. This, in turn, can prevent the federal reserve from lowering borrowing costs, another source of pain in the problem of living facing consumers.
Mexico and Canada have all pledged to retaliate by hitting their fees for American goods, setting the stage for a possible trade war within North America. China has promised to respond to higher tariffs.
Even the threat of tariffs has a cost, causing confusion and uncertainty that makes it difficult for investors, CEO and consumers to plan.
A measure of this confusion, the Index of Trade Policy Uncertainty, climbed in January to the highest level in the data returning in 1960.
Jay Foreman, the General Director of Basic Fun!, A toy company Care Bears and Tonka Trucks, among other goods, said his business had just begun to fight the 10% tariffs that Trump imposed on all Chinese imports that came into force last month.
Now the threat of an additional 10% fee is potentially leaving his company with another “$ 5 million gap” in its finances.
That’s because about 90% of all basic entertainment toys! Sales are produced in China. By about 2026, the company is being forced to fully absorb the increased cost of tariffs due to contracts already signed with customers, Foreman told CNN.
“Plando plan we have to mitigate a 10% fee is not applicable based on a 20% fee,” he said.
In Trump’s ideal world, the threat of higher tariffs would make Foreman move production to the US but this is simply not a financially applicable opportunity.
“There are things you are unable to produce physically here, and toys are one of them.” China, he said, has been an incomparable place for the production of toys due to the manufacturing workforce, cost advantages and production capacity.
But even if it was possible to transfer production to the US, he said it is everything, but guaranteed that he would have to load higher prices. “A children’s doll will go $ 30. Is this what the customer wants? “
And they are hardly just companies that rely on Chinese goods that worry. Even the Director General of one of the largest aluminum producers in the US, Alcoa, warned the 25% tariffs Trump threatened in all aluminum imports could cost the United States 100,000 jobs.
The signing of scared growth investors, a closely viewed projection of economic growth, was significantly reduced on Friday.
The GDPNOW Model of the Atlanta Federal Reserve now projects a 1.5% decrease in GDP for the first quarter. While it is too early to say if GDP will really become negative, it marks a rapid discount from a growth forecast of 2.3% ago.
The decline took into account the driving on the consumer expenses reported in the January consumer expense report issued on Friday. Consumer expenses make up about two -thirds of the US economy, which means that expense withdrawals can have a major impact on GDP.
Moreover, the uncertainty about tariffs can weigh the mood of American consumers, with the latest consumer trust measuring that deteriorate at a historical pace.
Pantheon’s macroeconomics noted that the fall of 11 points in the Conference Board Consumer Index between December and February is the largest to start one year since 2009-during the height of the large recession.
Worse, the fall of 9 points of the University of Michigan of Michigan’s consumer’s sense is most since the beginning of registers in 1978.
Of course, it is too early to know if the softening view of the economy is just a blow or something more worrying.
Time and again the US economy has shocked the fears of the recession, including in 2022 after the Fed raised interest rates to combat inflation, and in the summer of 2024 when the unemployment rate began to increase.
Ed Yardeni, advisory investment president Yardeni Research, is convinced that the fear of growth is just a head -of -the -day cold weather in January and the uncertainty about policies in Washington.
“It’s a soft piece. I don’t think it will last long, “Yardeni said.” I’m betting on the basic resistance of the economy and that it can resist the uncertainty of Trump 2.0. ”
Instead of starting a trade war, Yaren advised Trump to “hit an agreement and demand victory” with Canada and Mexico.
“Tariffs are a toxic area. You don’t want to stay there too long, ”he said.