‘Growing sense of unease’: Aussies thumped by Trump tariff turmoil

Aussies could change their spending habits as the fallout from US President Donald Trump’s tariffs continues to weigh on global economies.

Australia’s consumer confidence tumbled in April to a six-month low as US President Donald Trump’s global tariff policy sank the stock market, hitting household sentiment hard.

Confidence has dropped by 6 per cent to 90.1 points, according to the latest Westpac-Melbourne Institute survey.

This is tipped to have a flow-on impact on the Australian economy as Aussies say unemployment will rise, they will spend less on major purchases and now think it is a less favourable time to purchase a home.

US President Donald Trump’s tariff policies have caused a worldwide shake-up. Picture: NewsWire / AP Pool

Westpac head of Australian macro-forecasting Matthew Hassan said the developments from Mr Trump’s tariffs were making Aussies feel uneasy.

“Sentiment weakened sharply over the course of the survey week, with steep falls following the reciprocal tariffs announced by US President Trump on April 2,” he said.

“Those surveyed before the announcement reported an index read of 93.9, down only slightly from March’s 95.9.”

“Those surveyed after the announcement reported an index read of just 86.6, down nearly 10 per cent compared to March.”

Overall confidence has fallen 6 per cent due to Mr Trump’s tariff war.

The family finances versus a year ago subindex recorded a sharp decline of 8.5 per cent, the weakest levels since the stage 3 tax cuts were implemented in July last year.

Mr Hassan said this was due to the sudden falls on the ASX 200 and the US S&P 500, which were down 10 and 16 per cent respectively when the survey was conducted.

The ASX subsequently fell 4 per cent on Monday, which was in line with falls recorded at the start of Covid, the 2008 global financial crisis and 1987 recession.

Australians are feeling less confident due to Mr Trump’s tariff plans. Picture: NewsWire/ Gaye Gerard

“The subgroup detail shows bigger declines across older age groups that would have more exposure to the market decline, particularly through superannuation holdings,” Mr Hassan said.

“Sharemarkets have recorded more falls in the week since the survey, although it should be noted that in most cases markets are still above 2023 levels.”

Australia was hit with a blanket 10 per cent tariff as part of Mr Trump’s self-proclaimed “Liberation Day” for America that involved reciprocal tariffs on all US trading partners.

The direct impact of Mr Trump’s tariffs on the Australian economy is tipped to be minimal, impacting about $24bn worth of trade.

But some of Australia’s larger trading partners, including China, South Korea, Vietnam and Japan, have been hit with much larger tariffs, with a slowdown in their economies likely to impact Australia’s trade with them.

Compared with March figures, 5.1 per cent more Australians now expect unemployment to rise over the next year.

Australians will rethink their spending in the wake of the tariffs. Picture: NewsWire/ Gaye Gerard

On housing, the “time to buy a dwelling” index dropped 6.5 per cent to 85.7, unwinding all of the rate cut-related rally over the previous three months.

Buyer sentiment remains higher in Melbourne and Sydney compared with the rest of Australia. Westpac says that reflects price movements in the major cities.

Westpac–Melbourne Institute results also showed a 7.3 per cent drop in Aussies saying now is a good time to buy a major household item.

But falling consumer sentiment and a weaker economic outlook could have the silver lining of lower interest rates after the Reserve Bank monetary policy board meets on May 19-20.

“Westpac expects the deteriorating external situation, which has had a clear bearing on this month’s weaker sentiment, and further evidence of a sustained slowing in inflation, will see the board deliver a further 25bp rate cut at its May meeting,” Mr Hassan said.

“Indeed, given the scale of the tariff shock unfolding abroad and signs that the knock-on effect on sentiment will weigh on consumer spending, the board is likely to become much more focused on downside risks to growth than lingering questions about inflation.”

Originally published as ‘Growing sense of unease’: Aussies thumped by Trump tariff turmoil