Whipsawed by Trump’s tariffs, the US public is getting a lot more nervous about the economy

President Donald Trump’s volatile tariff threats are unleashing historic jumps in public anxiety, with the potential to undermine his pledges to strengthen a U.S. economy that is increasingly weakened.

The University of Michigan’s index of consumer sentiment tumbled 10.5% on a monthly basis in March and plunged 27.1% over the past year. The preliminary report released Friday shows that consumers’ expectations of annual inflation climbed to 3.9% from 3.5%, the largest monthly jump since 1993.

Along with a ferocious stock market selloff and downgrades to growth estimates by Wall Street economists, the latest confidence numbers are evidence of possible blowback facing Trump, who just months into his term has suggested that his threats of import taxes meant to create factory jobs would in the short term cause “a little pain.”

Declines were “seen consistently across all groups by age, education, income, wealth, political affiliations, and geographic regions,” Joanne Hsu, director of the survey, said in a statement. “Many consumers cited the high level of uncertainty around policy and other economic factors.”

Even Trump’s base supporters are turning slightly more pessimistic. Sentiment fell 3.2% among Republicans. They backed Trump in last year’s election on the promise that he would boost growth and bring down prices after inflation spiked to a four-decade high in 2022 under then-President Joe Biden, an event that caused consumer confidence to slump for the Democrats and helped pave the way for Trump’s return.

Democrats and independents posted even sharper declines in confidence, as the tariffs have triggered stock market selloffs and a wider trade war with historic allies such as Canada, Mexico, and the European Union.

Bill Adams, chief economist at Comerica Bank, warned that the waning confidence could crush economic growth.

“People who are afraid the economy is headed into a ditch won’t buy new cars or houses, go out to eat, or go on vacations,” Adams said. “If consumer sentiment continues to sour, spending will likely follow it lower and the economy could take a substantial hit.”

The survey also found that Americans expect unemployment to spike in the coming year.

So far, Trump appears to be doubling and tripling down on his commitment to taxing imports.

On Wednesday, Trump imposed 25% tariffs on all steel and aluminum imports. That led to retaliations by Canada and by the EU, which announced plans to put a 50% tax on American whiskey. Trump then responded on Thursday by promising a 200% tax on all European wine, spirts and other alcoholic beverages.

“We’ve been ripped off for years,” Trump told reporters on Thursday. “We’re not going to be ripped off anymore.”

The U.S. president has separately placed 25% tariffs on all imports from Mexico and Canada that will go into full effect in April after two months of various suspensions, with a lower 10% charge on oil and other energy products from Canada. Those tariffs are ostensibly about stopping illegal immigration and the smuggling of fentanyl, though Trump has also indicated that he wants the trade deficit closed with America’s two largest trading partners.

Trump also has a 20% tax on imports from China that was put in place to stop fentanyl production. The president also plans “reciprocal” tariffs starting April 2 on the EU, Brazil, South Korea, and other countries, in addition to import taxes on autos, computer chips, pharmaceutical drugs, copper,r and lumber.

The Trump administration is suggesting that these tariffs are something of an economic cure-all to what it inherited from Biden. Trump came into office with a healthy unemployment rate of 4% and the consumer price index at 3%, which was down from its June 2022 peak but still elevated. The Federal Reserve’s preferred inflation measure was 2.5%, above its 2% target.

The Michigan consumer sentiment reading follows a sharp drop in consumer confidence in February, as measured in a separate survey by the Conference Board. It also comes as the S&P 500 stock index has fallen more than 8% over the past month, as companies such as Target, Walmart, and Ford have warned about the uncertainty caused by tariffs.

The jump in Americans’ inflation expectations will raise concerns at the Federal Reserve. Inflation expectations can become self-fulfilling, because when consumers and businesses expect higher inflation, they often take steps that make inflation worse. Businesses can raise prices preemptively, for example, if they anticipate their costs will rise.

Last week, Fed Chair Jerome Powell said tariffs could pose problems for inflation-fighting efforts if they caused inflation expectations to rise. Rising expectations could make it less likely the Fed will cut its key interest rate this year, a top goal for the administration because such cuts could reduce mortgage rates.

“Don’t hold your breath for the Fed to ride to the rescue if plunging consumer confidence hits spending at the same time that inflation expectations are soaring,” Adams said.

Commerce Secretary Howard Lutnick, Trump’s lead on trade, said the administration won’t be fully responsible for the economy until the final three months of 2025, when he expects things will be better.

“We own the economy in the fourth quarter,” Lutnick said Friday on Fox Business Network’s “Mornings with Maria.” “We cut regulation. We get shovels in the ground of this $2 trillion of a commitment to build factories, to bring production back to America.”

But Lutnick also suggested that the tariffs against the EU and other nations are really about getting them to respect Trump.

“Donald Trump is just reminding the European Union who is in charge,” he said. “They need to respect Donald Trump, and he is going to teach them how to do that.”

U.S. stocks rallied to their best day in months on Friday as Wall Street’s roller-coaster suddenly shot back upward. That still wasn’t enough to keep the U.S. market from a fourth straight losing week, its longest such streak since August.

The S&P 500 jumped 2.1% a day after closing more than 10% below its record for its first “ correction ” since 2023. The last time the index shot up that much was the day after President Donald Trump’s election when Wall Street was focusing on the upsides of Trump’s return to the White House.

The Dow Jones Industrial Average climbed 674 points or 1.7%, and the Nasdaq composite jumped 2.6%.

A multi-day “relief rally could be coming” after so much negativity built among investors, said Yung-Yu Ma, chief investment officer at BMO Wealth Management. Swings in sentiment don’t go full-tilt in just one direction forever, and the U.S. stock market has been tumbling quickly since setting a record less than a month ago.

One piece of uncertainty hanging over Wall Street may be clearing after the Senate made moves to prevent a possible partial shutdown of the U.S. government.

Past shutdowns have not been a huge deal for financial markets. But any reduction of uncertainty can be helpful when so much of it has been sending the U.S. stock market on big, scary swings not just day to day but also hour to hour.

To be sure, the heaviest uncertainty remains with Trump’s escalating trade war. There, the question is how much pain Trump will let the economy endure through tariffs and other policies in order to reshape the country and world as he wants. The president has said he wants manufacturing jobs back in the United States, along with a smaller U.S. government workforce and other fundamental changes.

While stock prices may be close to finishing their reset to account for tariffs set to hit in April, Ma said concerns about how big an impact cutbacks in federal spending will have on the economy are “likely to remain for some time.”

U.S. households and businesses have already reported drops in confidence because of all the uncertainties created by Trump’s barrage of on-again, off-again tariff announcements and other policies. That’s raised fears about a pullback in spending that could sap energy from the economy.

Worries look to be only worsening among U.S. households, according to a preliminary survey released Friday by the University of Michigan. Its measure of consumer sentiment sank for a third straight month, mostly because of concerns about the future rather than complaints about the present. The job market and overall economy look relatively solid at the moment.

“Many consumers cited the high level of uncertainty around policy and other economic factors,” according to Joanne Hsu, director of the survey, and “frequent gyrations in economic policies make it very difficult for consumers to plan for the future, regardless of one’s policy preferences.”

Such fears have Wall Street focused on whether companies are seeing the souring mood of consumers translating into real pain for their businesses.

Ulta Beauty jumped 13.7% after the beauty products retailer reported stronger profit for the latest quarter than analysts expected.

The company’s forecasts for upcoming revenue and profit fell short of analysts’ targets, but Chief Financial Officer Paula Oyibo said it wanted to be cautious “as we navigate ongoing consumer uncertainty.” Analysts said the forecasts appeared better than feared.

Gains for Big Tech stocks and companies in the artificial intelligence industry also helped support the market. Such stocks have been under the most pressure in the recent sell-off after critics said their prices shot too high in the frenzy around AI.

Nvidia rose 5.3% to trim its loss for 2025 so far below 10%. Apple climbed 1.8% to pare its loss for the week, which at one point had been on pace to be its worst since the 2020 COVID crash.

All told, the S&P 500 rose 117.42 points to 5,638.94. The Dow Jones Industrial Average climbed 674.62 to 41,488.19, and the Nasdaq composite rallied 451.07 to 17,754.09.

In stock markets abroad, indexes rose across much of Europe and Asia.

Stocks jumped 2.1% in Hong Kong and 1.8% in Shanghai after China’s National Financial Regulatory Administration issued a notice ordering financial institutions to help develop consumer finance and encourage use of credit cards, do more to aid borrowers who run into trouble and be more transparent in their lending practices.

Economists say China needs consumers to spend more to get the economy out of its doldrums, although most have advocated broader, more fundamental reforms.

In the bond market, Treasury yields rose to recover some of their sharp recent losses. The yield on the 10-year Treasury climbed to 4.31% from 4.27% late Thursday and from 4.16% at the start of last week.

Yields have been swinging since January when the 10-year yield was approaching 4.80%. When worries worsen about the U.S. economy’s strength, yields have fallen. When those worries lessen, or when concerns about inflation rise, yields have climbed.

Trump administration workforce cuts at federal agencies overseeing U.S. dams are threatening their ability to provide reliable electricity, supply farmers with water and protect communities from floods, employees and industry experts warn.

The Bureau of Reclamation provides water and hydropower to the public in 17 western states. Nearly 400 agency workers have been cut through the Trump reduction plan, an administration official said.

“Reductions-in-force” memos have also been sent to current workers, and more layoffs are expected. The cuts included workers at the Grand Coulee Dam, the largest hydropower generator in North America, according to two fired staffers interviewed by The Associated Press.

“Without these dam operators, engineers, hydrologists, geologists, researchers, emergency managers, and other experts, there is a serious potential for heightened risk to public safety and economic or environmental damage,” Lori Spragens, executive director of the Kentucky-based Association of Dam Safety Officials, told the AP.

White House spokesperson Anna Kelly said federal workforce reductions will ensure disaster responses are not bogged down by bureaucracy and bloat.

”A more efficient workforce means more timely access to resources for all Americans,” she said by email.

But a bureau hydrologist said they need people on the job to ensure the dams are working properly.

“These are complex systems,” said the worker in the Midwest, who is still employed but spoke on condition of anonymity for fear of possible retaliation.

Workers keep dams safe by monitoring data, identifying weaknesses, and doing site exams to check for cracks and seepage.

“As we scramble to get these screenings, as we lose institutional knowledge from people leaving or early retirement, we limit our ability to ensure public safety,” the worker added. “Having people available to respond to operational emergencies is critical. Staff cuts threaten our ability to do this effectively.”

A federal judge on Thursday ordered the administration to rehire fired probationary workers, but a Trump spokesperson said they would fight back, leaving unclear whether any would return.

The heads of 14 California water and power agencies sent a letter to the Bureau of Reclamation and the Department of Interior last month warning that eliminating workers with “specialized knowledge” in operating and maintaining aging infrastructure “could negatively impact our water delivery system and threaten public health and safety.”

The U.S. Army Corps of Engineers also operates dams nationwide. Matt Rabe, a spokesman, declined to say how many workers left through early buyouts but said the agency hasn’t been told to reduce its workforce.

But Neil Maunu, executive director of the Pacific Northwest Waterways Association, said it learned more than 150 Army Corps workers in Portland, Oregon, were told they would be terminated and they expect to lose about 600 more in the Pacific Northwest.

The firings include “district chiefs down to operators on vessels” and people critical to safe river navigation, he said.

Their last day is not known. The Corps was told to provide a plan to the U.S. Office of Personnel Management by March 14, Maunu said.

Several other federal agencies that help ensure dams run safely also have faced layoffs and closures. The National Oceanic and Atmospheric Administration is laying off 10% of its workforce and the Federal Emergency Management Agency’s National Dam Safety Review Board was disbanded in January.

The cuts come at a time when the nation’s dams need expert attention.

An AP review of Army Corps data last year showed at least 4,000 dams are in poor or unsatisfactory condition and could kill people or harm the environment if they failed. They require inspections, maintenance and emergency repairs to avoid catastrophes, the AP found.

Heavy rain damaged the spillway at California’s Oroville Dam in 2017, forcing nearly 190,000 residents to evacuate, and Michigan’s Edenville Dam breached in storms in 2020, the AP found.

Stephanie Duclos, a Bureau of Reclamation probationary worker fired at the Grand Coulee Dam, said she was among a dozen workers initially terminated. The dam across the Columbia River in central Washington state generates electricity for millions of homes and supplies water to a 27-mile-long (43-kilometer) reservoir that irrigates the Columbia Basin Project.

“This is a big infrastructure,” she said. “It’s going to take a lot of people to run it.”

Some fired employees had worked there for decades but were in a probation status due to a position switch. Duclos was an assistant for program managers who organized training and was a liaison with human resources. The only person doing that job, she fears how others will cover the work.

“You’re going to get employee burnout” in the workers left behind, she said.

Sen. Alex Padilla, a California Democrat who pushed a bipartisan effort to ensure the National Dam Safety Program was authorized through 2028, said, “the safety and efficacy of our dams is a national security priority.

“Americans deserve better, and I will work to make sure this administration is held accountable for their reckless actions,” Padilla said.