Donald Trump’s sweeping tariffs and subsequent adjustments have not produced the desired effect on the American job market, according to economic analysts. While often implemented with the intention of shielding important domestic industries and workers, these trade policies have led to parallel increases in unemployment and increased volatility for affected businesses.
In 2025, the unemployment rate jumped by 0.4 percentage points to 4.4%. The overall jump is a very concerning sign. In reality, the year-over-year monthly job growth heading into 2025 sunk to lows we haven’t seen in many decades—not including periods of recession. Ceaselessly, from the moment Trump was elected, economists cautioned that his economic policies would start inflationary spikes and push unemployment skyrocketing. Now, those prognostications are coming true, day by day.
Dean Baker is co-founder and senior economist at the Center for Economic and Policy Research. He focused on the way Trump’s trade policies hurt businesses. The rising costs companies are facing is crushing their profit margins, Baker said. They are afraid to invest in new ways, because now tariffs are turning the things that used to be profitable into money-losers.
As companies deal with the effects of these tariffs, a quarter of them have had to freeze hiring plans or even lay off employees. What comes next from Trump remains a mystery, leaving companies worried about their prospects. This anxiety creates a risk-averse environment that cripples innovation. Perhaps economist Sean Snaith best captured this sentiment when he noted, “There is no reason that’s particularly compelling that you should be out there hiring like crazy.”
The impact of these tariffs is clear in the soaring prices of some of the affected imports. By 2025, prices for core commodities like those producing our beef burgers, coffee drinks, and tomato sauce were skyrocketing. Consumer inflation Overall price increases have been relatively constant. Yet, skyrocketing prices for basic commodities are making it harder for both consumers and businesses to cope.
Even before these tariffs were implemented the labor market was starting to tighten. Economists have pointed out that Trump’s erratic trade policy has exacerbated business uncertainty, impacting investment decisions and employment opportunities. The December jobs report for 2025 cemented these trends. It brought to national attention a sharp increase in unemployment amid a historic economic standstill.