The situation: With President Trump鈥檚 so-called 鈥渞eciprocal鈥� tariff deadline鈥攑ushed from July 9 to August 1鈥攆ast approaching, the White House has announced the outlines of trade agreements with Indonesia, the Philippines, and Japan.
Our take: This new tariff regime is already dragging on growth鈥攁nd the effects are likely to deepen. Before the Trump administration rolled out its trade agenda, we expected US retail sales this year to rise 2.9% YoY, a slight increase from the 2.8% growth last year. But given the current tariff regime, we now expect sales to increase just 1.5%, which would be a real sales decrease, since that鈥檚 below the rate of inflation.
We鈥檙e not alone. Goldman Sachs sees a clear deceleration ahead, citing tariffs as a likely driver of both rising prices and weakened consumer spending.
And while economists surveyed by The Wall Street Journal trimmed the odds of a recession to 33%鈥攄own from 45% in April鈥攊t remains well above the 22% forecast in January.
In this new normal, retailers and manufacturers should prepare for sustained margin pressure, increasingly cautious consumers, and slower growth.
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| Jul 23, 2025