Businesses sound alarm as Trump tariffs prompt consumers to cut spending

Businesses sound alarm as Trump tariffs prompt consumers to cut spending

By Reuters March 11, 2025

Summary

• Delta Air warns corporate, consumer travel weakening
• Kohl's forecasts weaker-than-expected profits
• 'Reluctance' in US consumer, industrial demand - Henkel
• Trump due to meet CEOs of America's biggest companies on Tuesday
• U.S. downturn worries trigger Wall Street sell-off

LONDON/NEW YORK, March 11 (Reuters) - Uncertainty brought by U.S. President Donald Trump's threats of tariffs and his shape-shifting trade policies are starting to have a chilling effect across many industries, businesses warn, as consumers pull back on everything from basic goods to travel.

Trump's back-and-forth tariff moves against major trading partners have kept businesses, consumers and companies on edge, prompting companies to warn they may have to raise prices, which could boost inflation and dent economic growth.

While Trump has said his policies could cause short-term pain, concerns about their economic fall-out intensified over the weekend after he declined to predict whether his economic policies would cause a recession.

On Monday, such fears fuelled a stock market sell-off that wiped nearly $5 trillion from the S&P 500’s peak last month, when Wall Street was cheering much of Trump's agenda.

Speaking after the market close on Monday, Delta Air Lines (DAL.N), opens new tab CEO warned that economic worries among consumers and businesses were already hurting domestic travel.

"We saw companies start to pull back. Corporate spending started to stall," CEO Ed Bastian told CNBC on Monday. "Consumers in a discretionary business do not like uncertainty."

Cuts by Americans to discretionary spending knocked airline stocks on Tuesday and with each day, evidence is mounting across the corporate world that the chaotic implementation of Trump's tariffs is translating into caution on Main Street.

Trump is expected to speak with around 100 CEOs at a regular meeting of the Business Roundtable in Washington, an influential group that includes bosses of major U.S. companies from Apple (AAPL.O), opens new tab to JPMorgan Chase (JPM.N), opens new tab and Walmart (WMT.N), opens new tab. The Republican president met with technology company executives at the White House on Monday.

LATEST TARIFFS

The latest round of Trump tariffs - 25% levies on imported steel and aluminium - kick in on Wednesday.

The tariffs will apply to millions of tons of steel and aluminium imports from Canada, Brazil, Mexico, South Korea and other countries that had been entering the U.S. duty free under the carve-outs.

Trump has vowed the tariffs will be applied "without exceptions or exemptions" in a move he hopes will aid the struggling U.S. industries.

On Tuesday, he said he was doubling the planned tariff on all steel and aluminium imports from Canada, bringing the total to 50%, in response to the province of Ontario imposing a 25% surcharge on electricity it exports to the United States.

In a post on Truth Social, Trump also threatened to "substantially increase" tariffs on cars coming into the United States on April 2 "if other egregious, long time Tariffs are not likewise dropped by Canada."

Ahead of these measures, a range of recent surveys of U.S. businesses and consumers have shown deteriorating sentiment, which, if sustained, could hamper investment and household spending.

The National Federation of Independent Business - a Washington lobby group whose members staunchly supported Trump in the 2024 election - reported small business sentiment weakened for a third straight month, erasing the bump from Trump's election victory.

"Uncertainty is high and rising on Main Street, and for many reasons," said NFIB Chief Economist Bill Dunkelberg, without elaborating.

That followed Monday's monthly New York Fed survey of consumer expectations showing households were growing more pessimistic about their financial prospects in the year ahead and a higher share of respondents expecting a rise in unemployment.

U.S. businesses broadly had greeted Trump's election with optimism, fuelled by pledges of deregulation and tax cuts.

But Republicans in Congress have yet to agree on a plan that would allow them to cut taxes and instead are focused this week on averting a government shutdown when funding expires at midnight on Friday.

RELUCTANCE

Companies sensitive to shifts in consumer and business sentiment are sounding the alarm about slowing demand for household and industrial goods.

Germany's Henkel (HNKG.DE), opens new tab, which makes Sellotape and Schwarzkopf hair products, said on Tuesday that Washington's policies were hurting the U.S. market disproportionately.

The company which also makes adhesives, currently sees a "reluctance" in terms of demand in the U.S. for both consumer and industrial segments, CEO Carsten Knobel told reporters.

It was too early to quantify a possible impact on its business as the situation remains volatile, he said.

Kohl's Corp (KSS.N), opens new tab forecast profits below Wall Street estimates, as the U.S. department store chain grapples with uneven demand.

Larger rivals Macy's (M.N), opens new tab and big-box retailers Walmart (WMT.N), opens new tab and Target (TGT.N), opens new tab have also tempered expectations as U.S. inflation risks rise and recession fears mount.

Telecom firm Verizon Communications' (VZ.N), opens new tab shares fell after it said first-quarter growth will probably be "soft".

Christian Schulz, deputy chief European economist at Citi, said growing fears about a U.S. recession will make life even harder for companies.

"Companies will have a tougher time in the short term to make investment decisions for the long term," he said.

US interest puts Greenland in focus

 Graphics

US interest puts Greenland in focus

By Prasanta Kumar Dutta, Sam Hart, Jon McClure and Mariano Zafra

Published March 11, 2025  07:17 AM GMT

Greenland is due to vote on March 11 in an election where independence has become the main topic, following recent statements by U.S. President Donald Trump that Denmark should cede control of the Arctic island to the U.S. due to its strategic importance for American security.

September  | 

Ice and snow

GREENLAND

Northern

sea route

Northwest

Passage

A map of Arctic sea ice extent in September 2024, which is significantly smaller than in September 2015.

The retreat of sea ice in the Arctic — which scientists warn will have severe consequences for Earth’s climate and could disrupt ocean currents — has made transport routes through the Arctic simpler and opened up new possibilities for oil and gas extraction.

According to data from Arctic Ship Traffic Data, the number of ships operating in the Arctic has increased 37% between 2013 and 2023.

Increase in ships in the Arctic

2,000

1,782

1,740

1,677

1,628

1,546

1,494

1,477

1,446

1,500

1,398

1,370

1,298

1,000

500

0

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

A chart showing the number of unique ships entering the Arctic Polar Code area has increased 37% between 2013 and 2023.

Note: Data indicates the number of unique ships entering the Arctic Polar Code area.

Source: Arctic Council

Much of the Arctic is split between exclusive economic zones which extend no more than 200 nautical miles from countries’ territorial waters and where they have jurisdiction over natural resources.

Arctic transport routes

Russia

USA

Canada

Norway

Denmark

Iceland

Exclusive economic zone

A map of exclusive economic zones in the Arctic circle.

Strategic importance for American security

Greenland's strategic location along the shortest route from Europe to North America is vital for the U.S. ballistic missile warning system.

A 1951 agreement between the United States and Denmark established a U.S. right to construct military bases in Greenland under the NATO framework as long as Denmark and Greenland are notified.

Historically, Denmark has accommodated the U.S. because Copenhagen does not have the capability to defend Greenland, and because of U.S. security guarantees to Denmark through NATO, according to Kristian Soeby Kristensen, senior researcher at Copenhagen University's Centre for Military Studies.

The U.S. military maintains a permanent presence at the Pituffik Space Base in Greenland’s northwest, under command of the U.S. Space Force. The base hosts early warning radar systems that are part of the Space Delta 4 missile defence mission and is strategically situated ahead of NORAD’s North Warning System, a line of radar installations designed to detect missile launches against North America crossing the Arctic.

Following the Trump administration’s comments, Danish lawmakers agreed to allocate around $2 billion to enhance Denmark’s own military presence in Greenland, admitting it has long neglected Greenland's defence.

NORAD

North Warning

System

Pituffik

Space Base

Moscow

Washington D.C.

A map of the NORAD North Warning System along Canada’s northern coast and Pituffik Space Base in northwestern Greenland.

Untapped resources

A 2023 survey showed that 25 of 34 minerals deemed “critical raw materials” by the European Commission were found in Greenland.

Greenland’s vast untapped resources include rare earths, graphite, copper, nickel, zinc, uranium, titanium, gold and diamonds, and 60% of the island’s non-ice territory has not yet been surveyed. The extraction of oil and natural gas is banned in Greenland for environmental reasons, and development of its mining sector has been snarled in red tape and opposition from Indigenous people.

The scale of Greenland

Greenland is more than three times the size of Texas, the largest state in the contiguous United States …

… and has a population less than a tenth that of Detroit, Michigan.

Detroit, Michigan

Population 633,000

Greenland

Pop. 56,000

Most of the population lives on just the 20% of the island that is not permanently covered in snow and ice, all along the coast.

Greenland was a Danish colony until 1953, when it officially became part of Denmark. It gained more autonomy in 1979 with the establishment of its parliament, and received broader autonomy in 2009.

The Trump administration’s interest has shaken the status quo and, combined with growing Inuit pride, has led some locals to view the March 11 vote as a historic chance to free Greenland from Danish influence.

Relations between Greenland and Denmark have been strained after revelations of historical mistreatment of Greenlanders under colonial rule. However, Trump's interest in making the island part of the United States has prompted Denmark to accelerate work to improve its ties with Greenland.

Opinion polls show that a majority of Greenland's inhabitants support independence, but they are divided over the timing and potential impact on living standards.

A poll in January indicated that 85% of Greenlanders do not wish to become a part of the United States, with nearly half saying they see interest by Trump as a threat.

Snow covers houses in Old Nuuk, located in front of Sermitsiaq Island in Greenland,
February 5, 2025.

Sources

NASA (shaded relief, bathymetry and land cover data), Natural Earth (Tom Patterson), U.S. National Ice Center (Ice and snow data), Artic Council, Marine Regions (exclusive economic zones)

Edited by

Jon McClure, Sandra Maler

COVID-19 (2020 ), its economic impact continues

COVID-19 shut us down five years ago. Here's how its economic impact continues

By Canan Sevgili, Paolo Laudani, Alessandro Parodi and Alberto Chiumento

March 8, 2025

March 8 (Reuters) - Five years after the World Health Organization first described the COVID-19 coronavirus outbreak as a pandemic, its effects are still being felt on the global economy.

COVID-19 and efforts to contain it triggered record government debt, hit labour markets and shifted consumer behaviour. Inequality has increased, while remote work, digital payments and changes in travel patterns have endured.

Though the immediate shock has passed, COVID-19's legacy continues to reshape global economies and markets.

Here are some of the main impacts.

DEBT, INFLATION AND INTEREST RATES

After countries borrowed money to protect welfare and livelihoods, global government debt has risen by 12 percentage points since 2020, with steeper increases seen in emerging markets.

The pandemic sparked high levels of inflation, which proved to be a major concern in the 2024 U.S. elections. Fuelled by post-lockdown spending, government stimulus packages and shortages of labour and raw materials, inflation peaked in many countries in 2022.

To offset rising prices, central banks raised interest rates, though the intensity of their interventions varied widely.

Sovereign credit ratings, which reflect a country's ability to pay back its debts, were driven lower as economies were shuttered and governments took on huge amounts of extra debt to fill the holes left in public finances.

Data from Fitch Ratings shows the average global sovereign credit score remains a quarter of a notch lower than it was when the pandemic started, reflecting financial challenges made worse by the pandemic, inflation and stricter financial conditions.

For less wealthy emerging market countries, the average remains roughly half a notch lower.

Lower credit ratings generally translate into higher borrowing costs on international capital markets.

LABOUR AND TRAVEL SHIFTS

The pandemic caused millions of job losses, with poorer households and women hit hardest, according to the World Bank.

As lockdowns eased, employment regained momentum but with a considerable shift towards sectors such as hospitality and logistics due to the growing retail delivery sector.

Women's participation in the workforce fell in 2020, mostly due to female over-representation in hard-hit sectors like accommodation, food services and manufacturing, and the burden of caring for children staying home from school. However, the gender employment gap has slightly decreased since, data shows.

Travel and leisure habits also changed. While people travel and eat out as much as they did in 2019, an increase of work-from-home has reduced commuting in major cities such as London.

In London, use of both tubes and buses remains at around a million fewer journeys a day than pre-pandemic.

The airline sector was one of those hit worst by the pandemic, recording industry-wide losses of $175 billion in 2020, according to the global airlines body IATA.

Vaccination campaigns eventually resulted in the lifting of travel restrictions, allowing people back on planes. For 2025, IATA expects an industry-wide net profit of $36.6 billion and a record 5.2 billion passengers.

But travellers must contend with prices of hotel rooms which in many regions have outpaced inflation and remain well above 2019 levels.

In the first half of 2023, Oceania, the continent in the southern hemisphere that includes Australia and smaller nations like Tonga and Fiji, saw the highest price increases from the same period of 2019, followed by North America, Latin America and Europe, according to data from Lighthouse Platform.

Despite minor fluctuations, there is little indication that global hotel prices will return to pre-pandemic norms.

Office vacancy rates are also at record highs in many countries, the result of more remote and flexible work. In the U.S., central business districts had the largest rise in vacancies, which are still evident today.

USHERING IN A DIGITAL WORLD

New consumer trends developed during global lockdowns, as home-bound consumers often had no other option than to shop online. This caused an uptick in online purchases from 2020 that has since stabilised.

Analysts say that in Europe the rise in online sales has been coupled with an increase in selling space, as retailers invest in physical shops to stimulate both online and offline sales.

The space, measured in square metres, edged up almost 1% from 2022 to 2023, an increase that should extend to 2.7% by 2028, data from market research company Euromonitor shows.

Shares in digital and delivery firms led gains during the pandemic, alongside those of vaccine-making pharmaceutical companies.

Five years on, some pandemic-era gainers have lost most of their appeal, but others have enjoyed lasting gains as new markets enabled by the digital shift have opened up.

Despite the bursting of some bubbles and the collapse of crypto exchange FTX, which left the industry reeling, the value of Bitcoin has increased by 1,233% since December 2019, as people looked at new investment opportunities to cut the risk of market volatility.

Stuck at home and with more cash on hand, people also began investing more, with roughly 27% of total U.S. equity trading coming from retail investors in December 2020. Stockbroker TD Ameritrade took the biggest slice of the cake before being acquired by Charles Schwab in a $26 billion deal.

Another platform which gained popularity during the retail trading boom of 2021 is Robinhood, which became the platform of choice for people to pump money into meme stocks.

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