Consumer confidence fell in June amid Trump tariff threats: report

Consumer confidence fell in June amid Trump tariff threats: report
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Consumer confidence sunk in June as rising trade tensions fueled concerns about the health of the U.S. economy, according to a report released Tuesday.

The Conference Board’s Consumer Confidence Index fell to 121.5 in June from 131.3 in May after three months of consecutive increases. The index fell to its lowest level since September 2017 as consumers expressed fears about business and labor market conditions.

The monthly gauge of consumer optimism is closely watched by economists and analysts as a predictor of future household spending and investment habits.

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“The escalation in trade and tariff tensions earlier this month appears to have shaken consumers’ confidence,” said Lynn Franco, senior director of economic indicators at The Conference Board.

“Although the Index remains at a high level, continued uncertainty could result in further volatility in the Index and, at some point, could even begin to diminish consumers’ confidence in the expansion.” 

The decline in consumer confidence came as President TrumpDonald John TrumpTed Cruz knocks New York Times for 'stunning' correction on Kavanaugh report US service member killed in Afghanistan Pro-Trump website edited British reality star's picture to show him wearing Trump hat MORE threatened to impose tariffs of 10 percent on all Mexican imports to the U.S., along with another tranche of taxes on $300 billion in Chinese goods.

While Trump later stood down from his threat to impose tariffs on Mexico, the president has not ruled out doing so in the future. And whether Trump levies new tariffs on China largely depends on his planned meeting with Chinese President Xi Jinping at this week’s Group of 20 Summit in Japan.

The U.S. imports more products from Mexico and China than any other countries. Experts say that expanding import taxes on Mexican and Chinese goods would raise prices for hundreds of crucial consumer products and slow the economy.

Further tariffs on China and Mexico would also prompt retaliation from those countries against U.S. exporters, including beleaguered farmers already suffering from record low commodity prices and severe weather. 

Trump has downplayed the cost of his trade policy for the U.S., insisting that China is paying for the import taxes despite arguments to the contrary from economists across the political spectrum.

But administration officials, including Treasury Secretary Steven MnuchinSteven Terner MnuchinIran: Rouhani, Trump won't meet at United Nations Trump denies reports he's willing to meet with Iran with 'no conditions' Turkey confirms delivery of second Russian anti-missile system MORE, have acknowledged the potential risks and said that the Commerce Department will exempt certain goods as needed to protect low-income consumers. 

Trump’s escalating trade war with China and heightened tensions with Mexico also added uncertainty to a global economy facing slowdowns in Europe and Asia. 

The Federal Reserve said last week that the central bank may cut interest rates soon if global headwinds and trade tensions continue to threaten the economy.

While Trump has repeatedly pressured the Fed to cut rates, a rate cut from the central bank could reflect deepening risks from the president’s trade policy, among other concerns.