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(Bloomberg) — Uncertainty over President Donald Trump’s heightened use of tariffs on US trading partners loomed large across the country in recent weeks, according to the Federal Reserve’s Beige Book survey of regional contacts.
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“Economic activity was little changed since the previous report, but uncertainty around international trade policy was pervasive across reports,” the survey released Wednesday said.
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Tariff mentions came up 107 times in the Fed report, more than double the number seen in the prior Beige Book. Variations of the word “uncertain” appeared 89 times. The outlook “worsened considerably” in several regions as economic uncertainty — especially around tariffs — increased, according to the report.
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The Federal Reserve Bank of Atlanta compiled the latest edition of the Beige Book using information gathered on or before April 14. The report includes commentary and anecdotes about business conditions in each of the Fed’s 12 regional districts, collected directly from businesses and other contacts. Fed officials next meet May 6-7.
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Prices increased across districts, with businesses expecting elevated input costs as a result of the levies. Many firms reported receiving notices from their suppliers about rising costs, and most businesses cited plans to pass higher prices onto consumers.
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“Firms reported adding tariff surcharges or shortening pricing horizons to account for uncertain trade policy,” the report showed.
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Trump’s plans for tariffs have changed frequently, creating great uncertainty for companies that import products and materials. Trump paused a plan to impose steep, so-called reciprocal tariffs on dozens of countries, but has still implemented an across-the-board 10% levy as well as duties in excess of 100% on China. Those tariffs are in addition to others the administration has rolled out on imports of steel, aluminum and autos.
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Employment was little changed to up slightly. The report highlighted declines in government roles and at organizations receiving government funding. That’s likely a reflection of the Trump administration’s efforts to shrink the federal workforce and cut costs.
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“Several districts reported that firms were taking a wait-and-see approach to employment, pausing or slowing hiring until there is more clarity on economic conditions,” the report said. “In addition, there were scattered reports of firms preparing for layoffs.”
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There were reports of consumers rushing to purchases vehicles and nondurable goods ahead of tariff-related price increases as well as a decline in international visitors. Non-auto spending, however, was lower overall.
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District Highlights
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- Boston: “Travel from Canada declined noticeably, and contacts feared that summer travel from Europe and China could suffer as well because of negative reactions to US tariff policies.”
- Philadelphia: “One contact reported canceling upcoming price increases, fearing a drop in customer demand. Meanwhile, another contact reported that a significant number of restaurants chose not to participate in an annual local restaurant week promotion because they couldn’t afford to discount their menu items.”
- Cleveland: “Several food and hospitality contacts tied decreased foot traffic to economic and political uncertainty, and they expected consumers to pull back on spending or trade down to more affordable options.”
- Minneapolis: “More firms reported a decrease in headcount compared with those reporting an increase.”
- Kansas City: “Several actions by businesses to improve liquidity and cash positions were highlighted in recent weeks, including seeking larger credit lines, selling inventory at discounts and selling long-term assets.”
- San Francisco: “Funding fell from public and private sector sources because of recent changes to federal policy as well as reduced discretionary and philanthropic spending by private businesses. Funding shortfalls led some nonprofits to cut services and program offerings and to lay off workers.”
- Atlanta: “Contacts in lumber and wood products manufacturing experienced slowing demand amid ambiguity surrounding tariffs — one firm noted having ‘zero faith in even a 6-month forecast.’”
- St. Louis: “Some contacts also reported they were reluctant to execute previous capital investment plans or create new ones due to ongoing uncertainty. A bourbon distillery indicated that planning ahead felt almost impossible when trade rules kept changing.”
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—With assistance from Maria Eloisa Capurro and Brendan Murray.
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(Adds anecdotes from regional Fed districts.)
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English (US)