EXPLAINER: Why 'tariff fears' are risky for America

"Tariffs don't cause inflation," said President Donald Trump in January. "They cause success."

Is he right? At the moment, it's not clear. The United States has suspended most tariffs as it tries to secure new deals with trading partners. But we do know this - tariffs cause fear. 

"Everybody expects prices to go up," says Jimmy Cary, a student in Washington DC. "Tariffs are the last thing we need right now. We're already dealing with inflation." 

The University of Michigan tracks 'inflation expectations' - in other words, what consumers think inflation will look like in the future. Trump won the election last November. Back then, Americans thought inflation would average 2.6 percent in the year ahead. By late April, they were expecting 6.7 percent.

Those are expectations. The actual inflation numbers are relatively solid, dropping to 2.3 percent in April - just above the Federal Reserve's target of two percent. 

But Americans are clearly worried about inflation. And sometimes, that makes it worse. 

Economists say inflation concerns can create a vicious cycle. So, for example, workers may seek higher wages when they see a risk of high prices. Employers may then increase wages, but pass the cost on to consumers. That results in higher prices. 

"Uncertainty is very costly. I cannot stress that strongly enough," says Kristalina Georgieva, head of the International Monetary Fund. "Major trade policy shifts have spiked uncertainty off the charts." 

Tariffs taking a toll

Several other polls suggest Americans are connecting the dots between tariffs and price dangers. 

Research firm Gallup held a survey just after Trump's tariff announcement on what he called 'Liberation Day' (April 2). Nine out of 10 U.S. respondents said it was 'likely' tariffs would mean higher prices. Just nine percent thought it was 'not likely'. 

An AP NORC poll conducted in mid-April produced similar results. Nearly 80 percent of American consumers thought prices would rise when tariffs kicked in. 

But this is not just a 'consumer problem'. Financial analysts were quick to respond to the 'Liberation Day' tariffs, warning that many companies would put plans on hold. 

Liz Miller is the founder of advisory firm, Summit Place Financial Advisors. Miller sounded the alarm on April 3, the day after Trump's announcement. 

"The risk is that we see businesses and consumers on pause," said Miller. "As they pause we could get a self-fulfilling slowdown. We could eventually get a recession."

Trump doesn't see it that way. He's promised an economic boom, and a solution to the inflation problem. 

"Starting on Day 1 we will end inflation, and make America affordable again," he declared at an election rally last August. 

The data suggests consumers aren't convinced. But the White House says they should keep the faith. 

"Trust in the president," said press secretary Karoline Leavitt as Trump marked 100 days in office. "There is a reason he was re-elected. It's because of the historic success of his economic formula."

But many Americans don't trust that formula - at least, not yet. They expect trouble and, if the tariff turmoil continues, trouble may be exactly what they get.