The Causal Effects of Tariff Uncertainty on Consumers' Macroeconomic Expectations and Spending Plans

We use a large-scale randomized controlled trial to study the causal effects of tariff beliefs on US consumers' macroeconomic expectations and spending plans. We find that it is important to distinguish between the first- and second-moment effects of tariff rate changes. Exogenous variation in tariff-level expectations and perceived future tariff uncertainty differentially affects consumers' expectations and perceived uncertainty about inflation, GDP growth, and unemployment. Furthermore, higher expectations of tariff rates induce an intertemporal substitution effect, increasing consumers' likelihood of buying durable goods. But higher tariff-rate uncertainty reduces consumers' readiness to spend on durable goods, consistent with precautionary saving motives.