In April, President Donald Trump placed a 25% tariff on all imported vehicles, but ahead of the tariff’s implementation, consumer spending surged in March before slightly declining the following month. “Tariff announcements have had a clear impact on the timing of large-ticket purchases, notably autos, but there are few signs yet that tariffs are leading to a general pullback in consumer spending,” Michael Pearce, deputy chief economist at Oxford Economics told Reuters. “We expect a more marked slowdown to take hold in the second half of the year, as tariffs begin to weigh on real disposable incomes.” Sales of vehicles and auto parts dropped by 3.5% in May — the largest monthly decrease since June 2024. Gas stations also experienced a significant drop in sales, down 2%. Home improvement retailers saw a 2.7% decline as well. Consumer spending at bars and restaurants fell by 0.9% in May, marking the first decline since February and the sharpest since February 2023. “Any time you get a pullback in consumer spending, it tends to lead to a slowdown in overall GDP and broader economic activity, which feeds in to slower sales, hiring and in turn slower income growth,” Gregory Daco, chief economist at Ernst & Young, told CNN’s Matt Egan in an interview.“The real risk is we have the onset of a more pronounced slowdown in the economy, driven not necessarily by the actual tariffs but instead by a surge in anxiety that led to a front-loading in demand and will now lead to a demand cliff.” Meanwhile, retail sales excluding automobiles, gasoline, building materials, and food services rose by 0.4% in May, following a revised 0.1% decline in April.