Consumers in the U.S. increased their spending in March, particularly on big-ticket items-more so than was warranted in the circumstances, with the announcement of sweeping new tariffs by President Donald Trump expected any day. Retail sales in March climbed by an astonishing 1.4% over February-the best performance of the month since January 2023, as per the U.S. Commerce Department.
Analysts say the sudden flash of sales improvement is not a normative sign of a strong economy; rather, it is seen as a jumpy pattern of consumers racing against the clock of expected cost hikes on the upcoming tariff increases. “Consumers are expecting sharply higher prices next year and are clearing the store shelves and picking up bargains while they can,” said Christopher S. Rupkey, chief economist, FWDBonds.
Car Sales are Driving the Numbers
Most of the March burst came from motor vehicle and parts dealers, which saw their sales up 5.3%. A similar pattern in retail sales emerged for sales of electronics, sporting goods, clothing, groceries, and online stores. Restaurants also increased together by 1.8%. But for furniture and furnishings stores, it was a bad month.
Even excluding motor vehicle sales, retail sales fared 0.5% better, an indicator of widespread consumer activity prior to tariff imposition.
Consumers Respond to Tariff Anxiety
Daniel Holland from Charlotte, N.C., said that he had not thought much about tariffs until just recently. Having bought a new bike in February, he is monitoring any tariff implications on parts and purchases. “I’m aware of it, especially with anything manufactured overseas,” he stated.
Some other consumers were equally worried about rising costs. Both Walmart and Amazon claimed to somewhat shield their clients but acknowledged the challenges. Amazon CEO Andy Jassy said they were importing products early to escape tariffs and working closely with suppliers. Walmart continues to focus on delivering low prices but is also likely to watch the tariff landscape closely.
Retailers, Consumers Brace for Fallout
At least in the short term, the retail sales boom is expected to fizzle, according to economists. Lydia Boussour, senior economist at EY, pointed out that spending will decline soon. “With the economy set to cool sharply in the coming months as tariffs take their toll, price-sensitive consumers are poised to become more judicious,” she said.
And so far, the currency ‘wars’ have already rocked the consumer confidence in April, just as it fell for the fourth time in a row. Several corporations are also delaying or canceling orders with China and other trade partners as they await definitions.
Tariff Effect Hits Small Business Heavily
Yes, large companies can weather storms; tiny and middle-sized companies swallow a lot of it. We had to scrap a shoe line that was meant to be our entry-level shoe at Ace Marks, an exclusive Miami-based footwear company, because of exorbitantly steep tariffs on imports from China,” said Paul Farago, president of the company. The shoe line was priced at about $120 but would have to sell for almost $300 now, thus becoming unsellable.
“Certainly the investments we would have put into place the people we would have hired… are now off the table,” Farago said.
However, as tariffs mold the current economy, both personal retailers and consumers must now identify every possible way within which they can navigate.
