On April 2, President Donald Trump unveiled sweeping new tariffs targeting a wide array of global economies.
These measures include a blanket 10% tariff on all countries, in addition to higher rates aimed at competitors like China, India, and the European Union. This comes on top of previously announced tariffs from the administration.
Tariffs are paid by importing companies, leading to higher costs for businesses. To counterbalance, companies may resort to layoffs to keep expenses in check.
This economic turmoil has already been reflected in the stock market, which saw a sharp drop, with the S&P 500 losing about 19% from its peak in February. Experts warn that the labor market may follow suit.
“If the president doesn’t reverse course, unemployment could rise to recessionary levels,” said Michael R. Strain, an economist at the American Enterprise Institute and Georgetown University. Experts are bracing for what’s next.
Unemployment May Hit 4.7% by 2025
According to a CNBC survey, 37% of CEOs predict job cuts in the coming year. Some companies, like car manufacturer Stellantis, have already begun downsizing, laying off 900 workers as a direct result of the tariffs.
The hardest-hit sectors are likely to be retail, wholesale trade, and manufacturing, according to Ernie Tedeschi of Yale’s Budget Lab.
Agriculture could also suffer, with Harry Holzer from Brookings predicting similar declines. However, U.S.-made product manufacturers could see short-term gains as demand for domestic goods rises.
“At least in the short term, employment would likely rise there,” says Holzer. “But almost nothing is 100% made in the U.S.A. anymore,” adds Adam Hersh of the Economic Policy Institute, pointing out that 45% of U.S. goods contain imported content.
Job Losses Will Likely Outpace Gains
Yale’s Budget Lab forecasts that Trump’s tariffs will slice U.S. GDP growth by a full percentage point in 2025.
This, Tedeschi says, will push the unemployment rate from 4.2% to 4.7%, equating to a loss of around half a million jobs.
Holzer’s predictions are more grim. “Job losses could easily reach the millions,” he says. While some sectors may see temporary employment boosts, the long-term outlook is bleak.
Long-Term Uncertainty Will Amplify Job Losses
Tedeschi warns that the tariff strategy could lead to a loss of 200,000 to 300,000 jobs annually over time, even before considering retaliatory tariffs from other countries.
“When you don’t know what the tariff rate will be tomorrow, businesses can’t plan for the future,” he explains.
The unpredictability of the policy is a key issue. Businesses are already hesitant to hire or invest in such an unstable environment.
As Holzer puts it, “It’s easy to see the negatives outweigh the positives.”
Despite the concerns, the White House has yet to comment on the potential fallout.
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