Before the tariffs take effect, consumers rush to buy cars and other goods. US retail sales in March increased by the highest percentage in two years.

Retail sales in the United States saw a significant increase in March, as the purchase of goods such as cars and electronics surged. This indicates that consumers were rushing to buy goods before the Trump administration's tariffs took effect. Data released by the US Department of Commerce on Wednesday showed that retail sales in March increased by 1.4% month-on-month, in line with market expectations, marking the largest increase in over two years and higher than the previous 0.2%. Core retail sales, excluding automobiles, also rose by 0.5% month-on-month, higher than market expectations of 0.3% and the previous 0.3%. The data suggests that consumers were rushing to make purchases before the 25% tariff on imported cars by Trump, as it is expected to increase the prices of American cars by thousands of dollars. In addition to cars, 11 out of 13 categories in the report saw an increase in sales. Sales of building materials, sporting goods, and electronics also rose, which may reflect consumers' efforts to buy these products before tariffs are imposed, as many of these products are from China. Furthermore, the only category in the report related to the service industry was expenditures at restaurants and bars, which increased by 1.8%, the largest increase since January 2023. As Trump pushes forward with tariff policies, multiple consumer sentiment surveys have plummeted significantly, leading to a sharp increase in some inflation expectations indicators and making Americans more pessimistic about their financial situation. Low-income consumers are already facing economic pressures, while the affluent class has been impacted by recent stock market volatility, deepening concerns about consumer spending prospects and highlighting the risk of economic recession. The data showed that retail sales in the "control group" an indicator used by the government to calculate GDP for the expenditure on goods increased by 0.4% in March, indicating that consumer spending maintained some momentum at the end of the first quarter. This indicator excludes data from restaurants, car sales, building materials stores, and gas stations. Although importers pay tariffs, these costs will eventually be at least partially passed on to consumers, even though this transfer may take several months. Since retail sales data is not adjusted for inflation, future tariffs may distort these figures, as the growth in sales may only reflect price increases rather than actual sales activity. Companies like Ford Motor Company and Walmart Inc. are trying to help consumers absorb some of the additional costs, but this will erode their profit margins. Despite this, executives from companies ranging from luxury group LVMH to beer maker Constellation Brands overall hold a pessimistic view of the market outlook and are cautious about how consumers will react. Federal Reserve officials are currently in a wait-and-see mode, waiting for clearer signs of the impact of tariffs on prices - and even on the overall economy. Some policymakers believe that tariffs will bring a one-time price shock, while others warn that their effects may be more widespread. Following the release of retail sales data, investors' focus will shift to Federal Reserve Chairman Powell's upcoming speech. At 01:30 Beijing time on Thursday morning, Powell will give a speech on the outlook for the US economy at the Chicago Economic Club, and the market is expected to closely watch for clues about potential interest rate cuts and progress in banking regulations involving increased holding of US debt. Although Trump has repeatedly called for interest rate cuts by the Federal Reserve, so far the Fed has maintained a "wait-and-see" stance, and Powell's latest remarks on rate cuts remain cautious. Meanwhile, according to informed sources citing the latest media reports, the Fed is resisting pressure from the White House and Washington and is not accelerating efforts to encourage bank regulatory reform to increase US debt holdings. With the turmoil in trade patterns and financial markets, Powell's fate is facing increasing uncertainty. US Treasury Secretary Yellen stated on Monday that they have been "considering the next candidate for Federal Reserve Chair and plan to start interviewing potential candidates in the fall." Notable financial analyst Jim Bianco posted on social media that Powell may face one of two fates: either being directly dismissed by Trump or being effectively sidelined.