The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Gabriel Rubin

WASHINGTON, March 4 (Reuters Breakingviews) - It turns out that politicians really do have the power to wrest the economic cycle - in this case, to negative effect. After a monthlong reprieve, U.S. President Donald Trump’s 25% tariffs on Canadian and Mexican imports are set to begin. Between haphazard spending cuts and will-he-won’t-he trade broadsides, the S&P 500 has coughed up nearly the entirety of its gains following Trump’s election, while forecasters have slashed growth projections. The most important reason: consumers, the engine of the U.S. economy, are pulling back, and it looks like it’s due to policy choices.

Consumer confidence has declined rapidly since the administration began ratcheting up trade threats. Along with the new North American levies, due to take effect Tuesday, Trump is imposing an additional 10% tariff on China, following an earlier 10% duty added last month. China and Canada immediately retaliated with new levies of their own, while Mexico is expected to unveil its response soon.

Retailer Target TGT.N, for one, warned on Tuesday that prices could rise this week. American shoppers appear to accept that import fees feed through to how much they pay. The expected rate of inflation over the next year jumped to 4.3% in February from 3.3% in January, according to a survey by the University of Michigan, the second straight month of larger-than-usual increases. About 40% of polled consumers mentioned tariffs without prompting, up from 27% in January and less than 2% prior to the election. Once expectations of price rises become unmoored from the central bank’s target, they can create a nasty feedback loop.

Indeed, consumers may be retrenching. Spending dropped by 0.2% in January, its worst month in four years. This is crucially important since consumption is the key driver of developed economies. Prediction models tracking live data are picking up on it: the Atlanta Federal Reserve’s GDPNow is forecasting a shocking 2.8% annualized economic contraction for the current quarter. In part that’s due to a rush of imports to get ahead of tariffs. But it also now foresees flatlining consumer outlays.

Such a sensitive model might overshoot and become unduly gloomy. But Goldman Sachs analysts revised their first-quarter GDP growth projection to 1.4% from 2.6%. After spiking as much as 6%, the S&P 500 Index .SPX is now up only 1% since election day.

Maybe the dire indicators will convince the White House to reverse course. But if the economy really is “brittle,” as Treasury Secretary Scott Bessent claims, then crushing the border-hopping automotive industry and terrifying consumers seems a reckless choice. For now, unemployment remains low and recession is not imminent. But that can change as quickly as Trump’s trade policy.

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CONTEXT NEWS

The United States on March 4 imposed 25% tariffs on imports from Mexico and Canada and doubled duties on Chinese goods to 20%, kicking off a fresh wave of trade conflicts with the country’s top three trading partners.

China responded by saying it would impose 10% to 15% tariffs on certain U.S. imports starting on March 10 and a series of new export restrictions for designated U.S. entities. Canada designated $21 billion of U.S. goods for new levies and Mexico is expected to unveil retaliatory measures in the coming days, President Claudia Sheinbaum said on March 4.

(Editing by Jonathan Guilford and Pranav Kiran)

((For previous columns by the author, Reuters customers can click on RUBIN/gabriel.rubin@thomsonreuters.com))