U.S. consumer confidence has dropped to its lowest level in five years, as mounting concerns over tariffs and trade tensions weigh heavily on household sentiment.

According to the latest data released by the Conference Board, the Consumer Confidence Index fell sharply to 87.4 in April, down from 98.1 in March, marking the steepest monthly decline since 2020.

The dramatic plunge reflects growing anxiety over the economic fallout of escalating tariff disputes, particularly between the United States and its major trading partners, including China and the European Union.

Recent tariff hikes on imported goods — ranging from electronics and automotive parts to basic household items — have begun to trickle down to consumer prices, contributing to a sense of uncertainty about future economic conditions.

“Consumers are feeling the pinch in their wallets,” said Dana Peterson, Chief Economist at the Conference Board.

“Many households are anticipating higher costs and potential job impacts due to these prolonged trade tensions.”

Inflationary pressures, partly driven by tariffs, are starting to affect everyday expenses. Consumers report higher prices on a variety of goods, including food, clothing, and electronics.

At the same time, confidence in the labor market is beginning to falter, with fewer respondents saying jobs are “plentiful” and more expressing concern over future employment prospects.

Retail analysts also point to declining discretionary spending, as uncertainty prompts consumers to delay big-ticket purchases such as appliances, vehicles, and home renovations.

The drop in confidence could spell trouble for sectors that depend heavily on consumer sentiment and spending.

Beyond economic indicators, geopolitical uncertainties — including upcoming elections, diplomatic instability, and global supply chain disruptions — are further contributing to a cautious consumer mindset.

Businesses, too, are signaling hesitation, with reduced capital investment and hiring plans surfacing across various industries.

In response to the confidence slump, market watchers anticipate renewed calls for monetary and fiscal policy support.

Some economists suggest the Federal Reserve may consider lowering interest rates or pausing further hikes to cushion the economy from potential shocks.

However, the most immediate impact is expected to be felt in consumer-driven sectors of the economy. With personal consumption accounting for roughly two-thirds of U.S. GDP, a prolonged downturn in confidence and spending could have significant ramifications.