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On April 2, President Donald Trump implemented extensive tariffs targeting various countries globally.
The announcement included a universal “10% tariff on all countries,” as detailed in a memo from the White House, with heightened rates imposed on specific nations such as China, India, and those within the European Union, in addition to pre-existing tariffs set by the administration.
These tariffs are a cost borne by importing companies, which may lead to increased expenses for businesses. To mitigate these costs, American business leaders may resort to workforce reductions.
The stock market reacted negatively to the announcement, with the S&P 500 index dipped about 19% from its February peak by early afternoon on Monday. Experts warn that the job market may experience similar fluctuations as a result of these tariffs.
“If the president does not reconsider his strategy, we could see the unemployment rate rise to levels typically associated with recessions,” said Michael R. Strain, director of economic policy studies at the American Enterprise Institute and an educator at Georgetown University.
Here’s a look at expert predictions regarding the labor market.
Unemployment rate forecast at 4.7% by the end of 2025
A significant 37% of CEOs anticipate job cuts within their companies this year, according to a survey from CNBC’s CEO Council, which includes over 100 leaders from diverse industries. Notably, car manufacturer Stellantis announced on April 3 that it would temporarily lay off 900 employees due to the recent tariffs.
Industries likely to face the most immediate workforce reductions include “retail trade, wholesale trade, and manufacturing,” according to Ernie Tedeschi, director of economics at Yale University’s Budget Lab. Agriculture sectors could also be impacted, suggests Harry Holzer, a senior fellow at the Brookings Institution and public policy professor at Georgetown University.
Conversely, companies producing goods entirely within the U.S. may experience a temporary boost: “In the short term, we might see job growth there due to increased demand,” Holzer notes. This could translate into hundreds of thousands of jobs added over the next few months.
However, as Adam Hersh, a senior economist at the Economic Policy Institute, points out, “no product is completely made in the U.S.A. anymore.” Approximately 45% of the content of American goods is sourced from imports. In 2023, around 52% of what consumers bought was labeled “made in America,” according to the U.S. Department of Commerce.
Experts are in consensus that job losses will likely surpass any gains.
Yale’s Budget Lab projects that Trump’s tariffs could reduce U.S. GDP growth by one percentage point in 2025, raising the unemployment rate from its current level of 4.2% to 4.7% by year’s end, translating into “approximately half a million job losses,” Tedeschi states.
Holzer’s estimations suggest potential job losses could reach into the millions.
Concerns over negative impacts outweigh perceived benefits
Looking ahead, Tedeschi warns of an ongoing trend, predicting an additional “200,000 to 300,000” fewer individuals in the labor market each year due to the tariffs. This projection does not even take into account the retaliatory tariffs that other nations might impose on U.S. products, which “will also significantly affect employment,” Hersh remarks.
Uncertainty regarding forthcoming policy changes could compel businesses to curtail hiring and slow job creation in the future. Tedeschi elaborates, “The chaotic implementation of these tariffs is just as damaging as their actual content.” He explains that businesses are hesitant to hire or invest when they lack clarity on tariff rates, which can change rapidly.
Overall, in evaluating the tariffs’ effects on the job market, Holzer finds that “it’s quite apparent that the drawbacks outweigh the advantages.” As of now, the White House has not provided a response to requests for commentary.
Experts advise individuals to maintain composure and consider strengthening their emergency funds with at least six months’ worth of savings to prepare for potential job losses.
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