| Not since US President Donald Trump’s first term have American businesses been this vocal about the impact of higher tariffs. In fact, they have more than twice as much to say as they did during the US-China trade war of 2018-19. That’s one way to read the Federal Reserve’s latest Beige Book, a periodic survey that the central bank’s 12 districts conduct to take the pulse of the national economy. A search of the report released Wednesday, which covers the period through April 14, shows the word “tariff” appears 107 times, more than double the peak of 51 mentions in October 2018. While some businesses reported stronger short-term demand and front-loading to get ahead of tariffs, most saw them as a nuisance that raised costs, inhibited activity and spread uncertainty. Trump has rolled out his global and sectoral tariffs claiming that his import taxes won’t reignite inflation or cause a recession. But there are warning signs in the Fed report’s anecdotal findings that run counter to the White House’s assurances. Mixed messages about the length and severity of Trump’s trade war is prolonging a state of paralysis, where economic activity seizing up and price pressures are too great for importers to absorb. Read More: Trump U-Turns on Powell, China Follow Dire Warnings on Economy “Most businesses expected to pass through additional costs to customers,” the report stated. “There were reports about margin compression amid increased costs, as demand remained tepid in some sectors, especially for consumer-facing firms.” ‘Darkened’ Outlook Another common theme was uncertainty about the future. Here’s what several districts said about the outlook: - Boston: “The outlook became more pessimistic on tariff-related concerns”
- New York: “Outlooks darkened, with many businesses anticipating declining activity and rising prices”
- St. Louis: “Economic activity has remained unchanged, but the outlook has slightly deteriorated”
- Dallas: “Outlooks deteriorated as heightened uncertainty surrounding domestic and trade policy hindered firms’ ability to plan”
Perhaps the economic fallout from tariffs in the US is one reason Trump and his advisers are softening the rhetoric about decoupling from China and talking about reducing levies just three weeks after “Liberation Day.” Beijing offered a response Thursday to Trump’s call for talks: a demand that the US revoke all unilateral tariffs before any negotiations take place. Related Reading: —Brendan Murray in London Bloomberg’s tariff tracker follows all the twists and turns of global trade wars. Click here for more of Bloomberg.com’s most-read stories about trade, supply chains and shipping. | 
