Analysis: Trump's latest tariffs boomerang on consumers at a dangerous moment

WASHINGTON - President Donald Trump's latest tariffs on Chinese imports threaten to jeopardize the expansion of the U.S. economy - and as a result, the president's own political fortunes are at risk.

That's because the latest slate of tariffs that took effect Sunday are primed to take a real bite out of consumers' wallets, just as consumer spending that has been propping up economic growth looks to be softening. The 15 percent duties on about $112 billion worth of goods will raise prices on items from clothing and footwear to sports equipment and televisions. While the Trump administration formulated earlier rounds of tariffs to try to shield consumers, hitting only 29 percent of so-called final goods from China, with the latest round, that number jumps to 69 percent, according to the Peterson Institute for International Economics.

That will swell the tab for the average American family from $600 a year from earlier rounds of tariffs to $1,000, per JPMorgan Chase.

Strong consumer spending has helped prop up economic growth even as other categories of activity have flagged in recent months. Business investment and manufacturing for example both contracted in the second quarter. But the economy expanded at a rate of 2 percent over that time period, largely thanks to consumer spending rising to a rate of 4.7 percent, the Labor Department reported last week.

Yet new data show consumer sentiment may be more fragile than it has appeared. The closely watched University of Michigan consumer sentiment index just registered its biggest monthly decline since December 2012. Back then, shoppers were worrying over the uncertainty spawned by "fiscal cliff" negotiations in Washington. Now, survey director Richard Curtin said, the potential impact of tariffs is sapping confidence.

"The August data indicate that the erosion of consumer confidence due to tariff policies is now well under way," Curtin said in a release accompanying the new data. "While the overall level of sentiment is still consistent with modest gains in consumption during the year ahead, the data nonetheless increased the likelihood that consumers could be pushed off the tariff cliff in the months ahead. This could result in a much slower growth in consumption and the overall economy."

And it's not just consumers. Confidence among small businesses also hit a seven-year low in August, according to a monthly survey commissioned by the Wall Street Journal. "The portion of respondents that expect the economy to worsen over the next 12 months rose to 40%, compared with 29% in July and 23% a year ago," the paper's Ruth Simon writes. And 45 percent said the new tariffs would impact their business.

Trump has scored his strongest marks with voters on his handling of the economy. But new polling shows that may be starting to waver as economic growth slows and trade war uncertainty dims the outlook. A Quinnipiac University survey last week found for the first time in Trump's presidency, more voters now say the economy is getting worse rather than better, by a 37-31 percent margin - and by 41-37 percent, voters say the president's policies are hurting the economy. A recent CNN poll also registered a meaningful drop in voters' assessments: 65 percent of voters still say economic conditions are good, but that represents a 5-point drop from May.

Trump has remained defiant as business owners and others turn up the volume on their distress calls.

Meanwhile, U.S. and Chinese negotiators are struggling to agree on a schedule for new trade talks intended for this month. "In conversations over the past week, the two sides have failed to agree on at least two requests - an American appeal to set some parameters for the next round of talks and a Chinese call to delay new tariffs," Bloomberg's Jenny Leonard and co. report. "Trump went ahead anyway with tariffs on Sunday, doubling down on a strategy that seems to be having the opposite of the desired effect."