Decline in U.S. Retail Performance in Q1 2025: Pressure from Tariff Policies Affects Consumer Confidence

In the first quarter of 2025, the annual U.S. GDP rate declined by 0.3%, marking its first contraction in three years, mainly due to a surge in imports and the effects of tariff policies. Financial reports from brands such as McDonald's, Harley-Davidson, and Estée Lauder indicate declining sales and weakened consumer confidence. The U.S. imposed tariffs as high as 145% on Chinese goods, resulting in a surge in imports and a record trade deficit. The consumer confidence index dropped to its lowest point since the pandemic, highlighting the adverse effects of tariff policies on the economy.

Decline in Retail Performance: Corporate Financial Reports Reveal Consumer Pressure

In April 2025, financial reports from several American consumer brands revealed worrying trends. McDonald’s unexpectedly reported a decline in global quarterly sales, describing the current market environment as "the most challenging conditions." Similarly, Harley-Davidson and cosmetics brand Estee Lauder also lowered their annual forecasts, citing "declining consumer confidence" and "macroeconomic uncertainty."

Estee Lauder noted that the decline in sales in the Americas was mainly due to deteriorating consumer confidence and sentiment, leading to excessive retailer inventory and inventory reduction actions. Chain restaurant brands like Shake Shack, Chipotle, and Starbucks issued similar warnings, indicating a significant reduction in American consumer spending on dining out.

Consumer Confidence Index Hits New Low Since Pandemic

According to data released by the Conference Board on April 29, the U.S. consumer confidence index fell to 86 in April, the lowest level since the onset of the COVID-19 pandemic. The index's expectations sub-index dropped to 54.4, well below the 80-point threshold that typically signals an economic recession.

In the survey, 48.5% of consumers expected stock prices to fall over the next 12 months, the highest level since 2011. Notably, the number of times consumers mentioned "tariffs" in the survey reached a record high, indicating that tariff policy has become a core factor affecting consumer economic perceptions.

Tariff Policy and Corporate Response: Specific Data and Examples

In April 2025, the U.S. government imposed tariffs of up to 145% on Chinese goods, with cumulative rates on some products reaching 245%. This policy triggered a rush to buy among companies, leading to a surge in imports in the first quarter. According to the U.S. Department of Commerce, the trade deficit in March reached $162 billion, a record high.

Furniture retailer Wayfair noted in its first-quarter financial report that consumers were purchasing goods in advance to avoid tariff increases, driving demand for the company. Wayfair co-chairman Steve Conine stated that suppliers were also striving to delay price hikes to maintain sales.

However, this "buying spree effect" is only a short-term phenomenon. The U.S. Manufacturing Index (ISM) reported 48.7 in April, remaining in contraction territory for the third consecutive month. The export orders index fell to 43.1, reflecting weak external demand. Several manufacturers explicitly identified "tariffs" as a major operational disruption in their reports, stating that they could not pass on costs to customers, leading to canceled quotes or orders.

Changes in Consumer Behavior: Hoarding, Reduced Spending, and Price Sensitivity

In New York City's Chinatown, Chinese merchants and community representatives pointed out that tariff policies have led to price increases for imported goods, resulting in significant hoarding behavior among consumers. For example, the price of certain foods like walnuts rose from $5 to $7.5 per package. Chinese restaurant operators reported sales declines of as much as 20%, with reduced customer visit frequency.

Ken Chen, head of Golden Gate Supermarket, stated that about 80% of goods are imported, and imports of some Chinese products have been suspended due to unpredictable tariff costs. There is concern that pricing too high will affect sales, while pricing too low will result in losses.

Additionally, according to reports from the U.S. Census Bureau and USA Today, U.S. exports to China surged to $4.88 billion in December 2024, the highest for the year, indicating that companies were stocking up in advance to avoid tariffs. In February 2025, total U.S. imports remained above $290 billion, a 21% increase compared to the same period last year.

Chain Reaction in Retail and Manufacturing

Several companies explicitly mentioned tariff-related operational pressures in their financial reports. General Motors (GM) lowered its 2025 earnings forecast, citing the need to "adapt to the new trade policy environment." McDonald’s reported the largest decline in same-store sales in the U.S. since the pandemic. Adidas, due to tariff uncertainty, postponed raising its annual financial forecast.

In manufacturing, the ISM report indicated that the production index fell to 44, the largest drop since the height of the 2020 pandemic. Electronics and chemical industry players reported soaring import prices and untransferable supply chain costs, leading to canceled quotes and lost orders.

Decline in U.S. Retail Performance in Q1 2025: Pressure from Tariff Policies Affects Consumer Confidence

Key Updates

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