US Economy Slowing Heading into Tariffs Turbulence

• The U.S. services sector slowed to a nine-month low in March, backing expectations that economic growth likely stalled in the first quarter amid uncertainty caused by import tariffs. The economic outlook was further dimmed by President Donald Trump unveiling on Wednesday a 10% minimum tariff on most goods imported into the U.S., sparking threats of retaliation and rattling global financial markets.
• Fitch Ratings estimated the nation's tariff rate was now the highest in more than a century. Economists warned of higher inflation and possible job losses as households slash spending and businesses pull back on investment, potentially pushing the economy into recession. Business and consumer sentiment had already tanked before Trump's sweeping tariffs.
• Ten industries, including wholesale trade, public administration as well as construction and retail trade, reported growth. Among those reporting contractions were information, educational services and healthcare and social assistance.
• Comments from businesses were downbeat. Some construction businesses said they were already seeing the effects of import duties on aluminum imposed by Trump in March, adding that "these costs will be passed on to customers."
• Tariffs were also a problem for information businesses, while utilities companies said they expected "price increases in the near future due to tariffs." Public administration firms said deep government spending cuts and mass firings of federal workers were "negatively impacting our operations."
• Trump sees tariffs as a tool to raise revenue to offset promised tax cuts and to revive a long-declining U.S. industrial base, a view not shared by economists. But economists worry that Trump's tariffs blitz since returning to the White House in January could push the economy into recession, especially if the nation's trade partners retaliate with duties of their own.

(Source: Reuters)