Consumer sentiment in the United States has sharply declined, as inflation expectations rise and overall economic outlooks remain uncertain.

The University of Michigan's consumer sentiment index fell 12% in March, reaching its lowest point since 2022, while expectations for future economic conditions dropped 18%.

Respondents anticipate inflation to hit 5% over the next year and remain above 4% over the next five years, with two-thirds predicting rising unemployment over the next 12 months.

In the midst of these economic concerns, the US stock market experienced a significant sell-off.

On Friday, major indices fell approximately 2%, contributing to an overall decline of more than 9% since the announcement of President Trump’s plan for reciprocal tariffs last month.

The Nasdaq market, heavily weighted with technology stocks, saw a decrease of 2.7%, with the so-called 'Magnificent Seven' tech giants suffering a drop of 3.5%.

Recent data from the Federal Reserve indicates inflation remains elevated, well above the central bank's target of 2%.

The personal consumption expenditures index, a key measure of inflation that excludes food and energy prices, rose 2.8% in February compared to the previous year, and increased by 0.4% from January.

These inflationary pressures contribute to fears of stagflation, a situation where economic growth declines while inflation remains high.

The Conference Board, a business membership group, reported a significant decline in business confidence this month, with its index measuring short-term expectations for income and employment falling to 65.2, marking the worst result since 2013. Economists have subsequently downgraded their forecasts for US economic growth, with some major investment banks projecting GDP growth below 1% for the year.

In response to these economic conditions, President Trump is set to announce further tariff measures, including a 25% tariff on imported vehicles, with implications for car pricing likely to be substantial.

Analysts estimate that consumers could face price increases of several thousand dollars for small cars, and up to $10,000 to $15,000 for SUVs. Despite the president's assertion that the tariffs aim to boost American manufacturing, the global nature of the auto supply chain suggests that it may take years for domestic production to ramp up sufficiently to meet demand.

The tariffs, which Trump has previously applied to imports of steel and aluminum, are presented as a means of enforcing trade reciprocity, although they are expected to disrupt US supply chains and negatively impact both domestic and global economic growth.

The administration's approach includes addressing non-tariff barriers and regulations posed by trading partners, including European digital taxes and local content requirements.

Additionally, estimates from White House trade advisor Peter Navarro suggest the new tariffs could generate over $6 trillion in revenue over the next decade, with immediate effects anticipated to disproportionately impact consumers.

The calculation hinges on the assumption that importers bear the costs of these tariffs, ultimately leading to heightened prices for American consumers.

The immediate targets for additional tariffs may include countries like China, the European Union, Mexico, and Japan, all of which have significant trade surpluses with the US. This strategy is designed to address perceived discrepancies in trade practice and aims to level the playing field for American businesses.

While the administration views tariffs as a leverage point in international trade negotiations, many economists argue that such measures are often counterproductive, potentially exacerbating existing economic vulnerabilities, rather than alleviating trade imbalances.