Federal Reserve Beige Book: Tariffs were mentioned 107 times, and economic prospects in many places deteriorated

Source: Jinshi Data

According to the Federal Reserve's Beige Book survey of contacts in various regions, the uncertainty surrounding Trump's tariff policy on U.S. trading partners has been particularly prominent in recent weeks.

The survey, released Wednesday, showed: "Economic activity has changed little since the last report, but uncertainty about international trade policy persists across all districts."

The word "tariffs" was mentioned 107 times in the Fed report, more than double the number in the last Beige Book. The word "uncertain" appears in various forms 89 times. The report said the economic outlook in several regions had "deteriorated significantly" as economic uncertainty - particularly around tariffs - increased.

The Atlanta Fed compiled the latest version of its Beige Book using information collected on or before April 14. The report contains comments and anecdotes about business conditions from each of the Fed’s 12 regional banks, information gathered directly from businesses and other contacts. Fed officials next meet on May 6-7.

Prices have risen in all regions, with companies expecting input costs to rise due to tariffs. Many businesses reported receiving notifications from suppliers about rising costs, and most said they planned to pass on the higher prices to consumers.

The report showed: "Companies reported that they had increased tariff surcharges or shortened pricing periods in response to uncertain trade policies. Most companies expected to pass the additional costs on to customers. Other companies reported - especially consumer-facing companies - that rising costs had squeezed profit margins as demand in some industries remained sluggish."

In the New York area, companies reported that the price increases of food, insurance and building materials were particularly obvious. Manufacturers and dealers say they have begun charging surcharges because of freight issues. Signs of damage from the U.S.-Canada trade dispute are also beginning to emerge. Tourists are booking fewer hotel rooms in New York City, and at least one tech company has reported losing a business client in Canada.

The report said: "The outlook for services companies has deteriorated significantly, with participants expecting a sharp decline in business activity in the coming months. Services companies reported a significant reduction in planned investments."

Trump's frequent changes to tariff plans have created great uncertainty for companies importing products and raw materials. Trump has suspended plans to impose high so-called "reciprocal" tariffs on dozens of countries, but an across-the-board baseline tariff of 10% remains in place. These tariffs are in addition to previous duties imposed by the Trump administration on steel, aluminum and auto imports.

Businesses reported that consumers were rushing to buy cars and non-durable goods ahead of tariff-related price increases, while the number of international tourists fell. However, overall, non-auto consumption decreased.

Employment was little changed or rose slightly. The report highlighted a decline in government jobs and positions at agencies that receive government funding. This likely reflects the Trump administration's efforts to reduce the size of the federal government workforce and cut costs.

The report said: "Several districts reported that businesses were taking a wait-and-see approach to employment, pausing or slowing hiring until economic conditions became clearer. In addition, there were isolated reports that businesses were preparing for layoffs."