Customers in the US increased their shopping in March, with retail sales rising 1.4% month-on-month — the highest jump in over two years.
Excluding sales at auto dealers, the total rose 0.5%, according to data from the Commerce Department on Wednesday.
Sales at car dealers rose 5.3%, while electronics retailers recorded a 0.8% increase. Sporting goods retailers enjoyed a 2.4% gain, and grocery stores saw a 0.1% increase. Sales at clothing and accessories stores, meanwhile, jumped 0.4%, online retailers posted a 0.1% gain, and restaurants saw a 1.8% increase. Bucking the trend, furniture and home furnishings stores posted a 0.7% decline.
Year-on-year, the value of retail purchases rose 4.6% in March.
The monthly lift suggests that consumers were scrambling to buy certain goods — particularly cars — before President Donald Trump’s trade tariffs kicked in.
The US imposed a 25% tariff on imported cars on 3 April, while duties on car parts are set to arrive before 3 May. This could increase prices for consumers by thousands of dollars.
Earlier this week, President Trump nonetheless suggested that these duties could be altered to help carmakers move manufacturing back to the US. Analysts note that it will, however, be a hard sell for Trump to reshore manufacturers, especially due to the volatile nature of his trade policies.
March’s retail rush is likely also linked to other tariffs from the US administration. President Trump has placed a 145% duty on many imports coming from China, although levies on Chinese electronics have been temporarily halted.
At the start of April, Trump also unveiled a raft of so-called “reciprocal” tariffs on other nations, many of which have been removed for 90 days — leaving a base levy of 10% on goods from these countries.
Goods from Canada and Mexico, on the other hand, face tariffs of up to 25%, while imported steel and aluminum are taxed at the same rate.
It’s unclear how much of the tariff bill will be absorbed by companies, and how much will be left to ordinary customers.
This uncertainty has already dented confidence, with US consumer sentiment declining in April for the fourth consecutive month. With fears of inflation and job losses rife, the University of Michigan's consumer sentiment index also fell on Friday to its lowest level seen since the COVID-19 pandemic.
When it comes to company spending, small and big firms are taking a hit, although more-established companies will generally find it easier to absorb tariff costs. A number of retailers are halting shipments from China until they have a clearer idea of the US’ long-term trade plan.
Retail sales aren’t adjusted for inflation, meaning these figures could artificially rise in the coming months as tariffs make goods more expensive, even if US consumers are buying less.
