U.S. retail sales fall and Americans turn cautious after spending early this year to beat tariffs

A Tariff Free sign to attract vehicle shoppers is at an automobile dealership in Totowa, N.J., on April 30, 2025. (AP Photo/Ted Shaffrey)

WASHINGTON — Retail sales fell sharply in May as consumers pulled back after a sharp increase in spending in March to get ahead of President Donald Trump’s sweeping tariffs on nearly all imports.

Sales at retail stores and restaurants dropped 0.9 per cent in May, the Commerce Department said Tuesday, after a decline of 0.1 per cent in April. The figure was pulled down by a steep drop in auto sales, after Americans ramped up their car-buying in March to get ahead of Trump’s 25 per cent duty on imported cars and car parts. Excluding autos, sales fell 0.3 per cent.

The sales drop comes after sharp declines in consumer confidence this year. Still, inflation has cooled steadily and unemployment remains low, which could fuel steady spending in the coming months, as the economy has remained mostly solid.

Sales dropped 2.7 per cent last month at home and garden centers, 0.6 per cent at electronics and appliance stores, and 0.7 per cent at grocery stores. There were some bright spots: Sales rose 0.9 per cent at online retailers, 0.8 per cent at clothing stores, and 1.2 per cent at furniture stores.

Christopher Rugaber, The Associated Press