Trade tensions intensified during Trump's presidency, contributing to a modest slowdown in the American job market.
Revised Article:
Updated May 2, 2025, at 7:57 PM CDT
President Trump's trade war has put a slight damper on hiring growth, nudging it downward in April.
Employers added 177,000 jobs last month, a figure published Friday by the Labor Department. This dip is surprisingly modest, considering the intensifying trade war. Forecasters had predicted a bigger drop due to the volleys of tariffs the president has been implementing.
While the unemployment rate remains steady at 4.2%, over half a million people have joined or rejoined the labor force. Jobs were added in various sectors, such as hospitals, restaurants, and warehouses. The federal government, on the other hand, continued to shed workers. Employment gains for February and March were revised down by a total of 58,000 jobs.
Trade tensions began to surface in the form of new tariffs at the start of the month. Some of these import taxes have since been suspended, but the average tariff rate is still at an all-time high since the Great Depression. Experts at the International Monetary Fund predict these tariffs could result in higher prices and slower economic growth.
The trade war has ruffled the stock market, with the S&P 500 index dropping about 6.5% from inauguration day. Trump's tariffs have also left consumers feeling gloomy about the economic outlook. An index of consumer confidence fell in April to its lowest level since the pandemic began.
Manufacturers, many of whom rely on imports for components or raw materials, are struggling under mounting costs from tariffs. Factories actually cut 1,000 jobs in April. A survey conducted by the Institute for Supply Management showed factory orders and output declined while prices increased. Factory managers' biggest concern is, you guessed it, tariffs.
"We're teetering on the edge of a cliff," said Tim Fiore, who oversees the monthly survey. "We hope we won't fall off, but the signs are definitely not positive."
The economy was already showing signs of weakness when Trump announced the widespread tariffs in April. Economic output had shrunk in the first three months of the year as businesses and households braced for the looming trade war.
The health of the job market will be crucial in determining whether the economy will continue to shrink or begin to rebound. People working and earning money are key drivers of spending, which keeps the economy moving. If employment drops significantly or people fear losing their jobs, they may become skittish about spending, potentially tipping the economy into a recession.
Although average wages in April rose 3.8% from the previous year, this increase is similar to that of March and unlikely to keep up with the potential rise in prices due to tariffs.
This article was originally published by NPR.
Extra Insight:
While the trade war may have temporary consequences, there are potential long-term geopolitical shifts and economic impacts on global markets. European economies may overcome the deceleration and even grow by up to 2% in 2025 due to fiscal stimulus and redirected Chinese exports, lowering input costs [3]. On the other hand, the proposed tariff escalation could reduce the U.S. GDP by 1.3%, making it critical to monitor political negotiations in the coming months [2].
- The intensified trade war, with its volleys of tariffs, has nudged hiring growth downward, surprising many economists who had predicted a bigger drop.
- The average tariff rate is at an all-time high since the Great Depression, according to experts at the International Monetary Fund, which could result in higher prices and slower economic growth.
- In the realm of policy-and-legislation and politics, the trade war has left many businesses, particularly manufacturers who rely on imports for components or raw materials, struggling under mounting costs from tariffs.
- Looking ahead to 2025, European economies may overcome the deceleration and even grow by up to 2% due to fiscal stimulus and redirected Chinese exports, lowering input costs.
- However, the proposed tariff escalation could reduce the U.S. GDP by 1.3%, making it critical to monitor political negotiations in the coming months to preempt a possible recession.
- In the overall outlook of the finance, business, and general news sectors, the trade war and its economic ramifications continue to be a significant point of concern for central banks and policymakers worldwide.
