US Economy: Consumer Confidence Drops Sharply In June Amid China Tensions

The Conference Board's Consumer Confidence Index dropped to a 21-month low in June, amid an ongoing trade war between the United States and China.

The Index dropped to 121.5 this month, a nearly 10-point drop from May's reading of 131.3. June's Index was at the lowest level since September 2017.

"The escalation in trade and tariff tensions earlier this month appears to have shaken consumers' confidence," said Lynn Franco, the Conference Board's senior director of economic indicators.

The Trump administration has imposed tariffs of 10% on nearly $200 billion of Chinese goods. The tariffs could have had an adverse effect on consumers, as prominent U.S. retailers such as Walmart have declared that they will have to raise prices in response to the tariffs.

The Index shows a contrast to what economists would consider a strong economy. In May, the U.S. had an unemployment rate of just 3.6%, while inflation has also been low. Yet, Trump's China tariffs have shaken up the economy and could threaten these strong indicators.

The U.S. Federal Reserve said last week it would not try to lower interest rates to stimulate the economy but would be open to changing its policy due to "uncertainties."

Manufacturers have also taken a hit due to the tariffs. A report on manufacturing in New York state showed business activity taking a sharp turn downward in June. Nationwide, manufacturers have said China tariffs are one of their greatest concerns.

While on the campaign trail in 2016, Trump promised to bring back manufacturing jobs that have been outsourced due to globalization.