Tariff’s tariff war shakes the US economy and generates revolt in 12 states

The impact of the trade war began by Donald Trump begins to appear more clearly in the economic indicators of the United States. Data released by Global S&P show that the compound PMI – one of the main thermometers of economic activity – fell from 53.5 to 51.2 points between March and April, the lowest level in 16 months. Although still above the 50-point inflection point, the index signals to increasingly shy growth in the US economy.

“The PMI still does not point to contraction, but a worrying slowdown,” explains Felipe Uchida, partner of Equus capital. He points out that the tariff climb promoted by the White House has generated a cycle of high costs, export retraction and deterioration of business trust – especially in the service sector, responsible for about 70% of US GDP.

Alert and confidence in falling

The Services PMI fell from 54.4 to 51.4 in the same period, especially the retreat in the entrepreneurs’ confidence. According to Global S&P, optimism compared to the next 12 months has reached the lowest level since the beginning of the Covid-19 pandemic. For Sidney Lima, an analyst of Ouro Preto Investimentos, “Protectionism intended to strengthen the industry, but ended up generating uncertainty, making production more expensive investors.”

This volatile environment is also reflected in prices: goods and services have risen at the highest pace in more than a year, especially manufactured products – directly impacted by tariffs imposed on countries such as China, Mexico and Canada.

States rebel: process in justice against Trump

The political response to the economic scenario came on Wednesday (23), when 12 US states filed a joint action against the Trump government at the International Court of Commerce in New York. The accusation: Abuse of the International Emergency Economic Powers Law to impose rates without proper authorization from Congress.

Led by Attorneys General from States such as Arizona, New York and Connecticut, the authors of the process claim that tariffs have caused “unprecedented economic instability”, affecting companies, jobs and families. “Trump’s tariff scheme is insane, economically irresponsible and illegal,” said Kris Mayes from Arizona. William Tong, Connecticut, called the fees “a disguised tax on the Americans.”

Suspense Retail: Early consumption and paralyzed businesses

Tariff tensions also messed up consumption and planning in the retail sector. Sales rose 1.4% in March, but, according to the Department of Commerce, the reason would be the anticipation of purchases to avoid price increases. “The industry is operating in the dark. Suppliers are lost with such instability,” says Lee Peterson, vice president of WD Partners.

Large networks like Walmart, Target and Home Depot met with Trump earlier this week to discuss the situation. Target, one of the most affected, accumulates a 32% drop in its shares by 2025. “Investors are afraid. Everyone is postponing expansion plans or new investments,” says Peterson.

International reactions and adaptation trends

In addition to internal pressure, the Trump government faces external criticism. China’s Ministry of Commerce again called for the suspension of tariffs, classifying them as “threats and coercion.”

Meanwhile, the retailer tries to adapt. Some networks are betting on quick inventory turnover and the circular economy, focusing on used products. “This market will explode, especially if problems in supply chains persist,” says Peterson.

Uncertain path to the US economy

As the scenario unfolds, one thing seems increasingly evident: the rates that should protect the American economy may be becoming its Achilles heel. The risk of stagflation – weak growth with high inflation – returns to the radar of analysts. And the judicial contestation of a dozen states reveals an increasingly divided country regarding the conduct of its economic policy.