U.S. Sentiment Slump Means Trade Deals Can't Come Quickly Enough

The U.S. economy is teetering on a precipice, and the numbers don’t lie. Consumer confidence has plunged to levels unseen since the Great Recession, inflation expectations are spiking, and businesses are paralyzed by uncertainty over unresolved trade deals. With the clock ticking on a 90-day deadline to finalize agreements with 75 nations, the stakes couldn’t be higher. The question now is: Can trade negotiations keep pace with a public sentiment that’s already in freefall?

Consumer Sentiment in Freefall

April 2025 marked a turning point. The Conference Board’s Consumer Confidence Index plummeted 7.9 points to 86.0, its lowest level since the early days of the 2020 pandemic. The Expectations Index, a bellwether for future economic health, cratered to 54.4—the lowest since October 2011. This isn’t just a hiccup; it’s a full-blown crisis of confidence.

Key drivers of the slump:
- Inflation fears: 12-month inflation expectations hit 7%, the highest since November 2022.
- Job market pessimism: 32.1% of consumers anticipate fewer jobs in six months—levels not seen since the depths of the 2009 recession.
- Trade policy anxiety: Tariffs were cited as the top concern in write-in responses, with mentions hitting an all-time high.

The University of Michigan’s preliminary April data was even bleaker. Its Sentiment Index fell to 52.2, a 34.2% drop year-over-year and the lowest on record. “Consumers are bracing for a storm,” said survey director Joanne Hsu.

Trade Deals in the Rearview Mirror

Despite the urgency, progress on trade negotiations remains glacial. The U.S. has secured only one major deal—the U.K. agreement—to date, with 74 nations still in limbo under a 90-day tariff pause. Key hurdles:

1. Logistical chaos: The Trump administration’s purging of federal trade negotiators has left the U.S. relying on private law firms to fill gaps—a move critics call “unprecedented and fraught with conflicts of interest.”
2. Political posturing: The EU and China remain locked in tit-for-tat tariff battles. The EU has delayed retaliatory tariffs on $15 billion of U.S. goods until July, while China insists the U.S. must first lower its 245% levies.
3. Realistic timelines: Even optimistic scenarios envision only incremental wins—like modest tariff cuts or purchase agreements—rather than comprehensive deals.

Take the U.S.-EU standoff: While both sides have delayed tariffs until July 9, disagreements over auto standards and agricultural practices (e.g., wine, cheese) show no sign of resolution. Meanwhile, the U.S.-China talks are bogged down by mutual accusations and trust issues.

The Path Forward

The clock is ticking. By July 9, tariffs on $8 trillion of global trade could snap back into place, triggering a “tariff shock” that the Federal Reserve warns could upend markets. The stakes are clear in the economic forecasts:

• Baseline scenario (50% probability): GDP growth slows to 2.1% in 2026, with tariffs dampening consumer spending on big-ticket items like cars and appliances.
• Downside scenario (25% probability): A trade war drags GDP growth down to 1.3% in 2026, as inflation surges and investment collapses.

The Fed’s hands are tied. Chair Jerome Powell has already scaled back interest rate hikes to 50 basis points in 2025, but he admits: “Inflation expectations are outliers. We can’t fix this with rates alone.”

Conclusion: Time’s Running Out

The data is unequivocal: The U.S. economy is in a precarious balancing act. Consumer sentiment is at a 13-year low, inflation expectations are rising, and trade negotiations are mired in political and logistical quicksand. The 90-day deadline is more than a negotiating tactic—it’s a do-or-die moment for global markets.

Without swift progress, the risks are dire. A 10% tariff hike on Chinese goods, as projected in the downside scenario, would add $800 billion to U.S. import costs annually. Meanwhile, the S&P 500’s April plunge—a 10.5% drop in just two days—offers a glimpse of what could come if trade wars escalate.

Investors should prepare for volatility. Sectors like autos, tech, and industrials—already reeling from supply chain disruptions—are particularly exposed. The only safe bet? Pray for a deal—and hope history doesn’t repeat itself.

As one analyst put it: “This isn’t just about tariffs anymore. It’s about whether the world can still trust the U.S. to play by the rules.” The clock is ticking.