We’ve written previously on the potential long-term impacts of tariffs and trade wars. The possible negative effects can include sustained higher prices on raw materials, consumer goods, electronics, food, automobiles, and more. Supply chains can suffer long-lasting or even permanent harm. Economic uncertainty can suppress investment and overall economic growth. Manufacturing can potentially slow due to supply issues, changes in demand, or industry instability. Domestic and international trade can be slowed or halted in some instances.
Naturally, a glass-half-full perspective can reveal multiple potential benefits of a well-crafted tariff strategy, including: the protection and stimulation of domestic industries; the retention of domestic resources and intellectual properties for national security; an increase in government revenue; encouraging local investment, and more.
One of the most oft-cited justifications for tariffs is the retention and creation of domestic jobs. Let’s look at the impacts the 2025 trade war has had so far on the US job market and related issues.
Certainly, the Trump White House has been effusive in its praise of the impact of his administration’s tariff policies on jobs. The November 20, 2025 report cites White House Press Secretary Karoline Leavitt as saying, “The September jobs report more than doubled market expectations—adding 119,000 new jobs to the American economy. In stark contrast to the disastrous Biden economy, almost all of these new jobs were in the private sector and went to American-born workers instead of illegal aliens.”
The report continues:
The New York Times, The Wall Street Journal, ABC News, CNBC, and CBS News are all cited as stating that the September 2025 jobs report and data are showing much stronger growth than expected.
We can examine an acknowledged liberal point of view as a counterpoint, as the Center for American Progress’s perspective on the US jobs data as of August is not such a glowing endorsement: “Despite claims from the Trump administration that the tariffs are going [to] bolster American manufacturing, the latest economic data tell a different story. Manufacturing employment has been falling since April, and job growth is slower than it was between January 2024 and August 2024. The timing of the manufacturing declines corresponds with the Trump administration’s disastrous tariff policies, which are projected to cost American households $2,400 annually. Since President Donald Trump’s tariff announcement in April 2025, overall manufacturing employment has declined by 42,000, while job openings and hires have fallen by 76,000 and 18,000, respectively. Despite Trump’s claims that his policies will reignite the manufacturing industry in the United States, his policies have achieved the opposite [emphasis added].”
Uncertainty in the economy can impact job creation and labor markets, and tariffs create uncertainty. The Council on Foreign Relations reported that trade uncertainty dramatically increased in 2025 compared to the first Trump administration. From January 2016 to June 2019, the Fed’s Trade Policy Uncertainty (TPU) Index rose nearly 60 percent following the imposition of President Trump’s first-term tariffs. However, from January until April 2025, the TPU spiked by a whopping 218 percent, threatening to depress US investment and job creation, according to the CFR.
Hiring and job creation are likely to be depressed by tariff-related uncertainty… but it can get worse as jobs are actually eliminated in some cases. As one example, TrueCommerce reported that the April 2025 25% tariff on imported vehicles and parts, including those from Canada and Mexico, disrupted North American automotive supply chains so badly that Stellantis, a leading multinational automotive manufacturer, responded by temporarily shuttering factories and laying off 900 US workers due to operational uncertainty.
The fact is that tariffs usually increase inflation. Labor Department data shows that inflation had been cooling for several consecutive months at the start of the year before Trump implemented broad tariffs. A November 26, 2025 report from Money says that the 2025 Trump trade war has increased US inflation by 0.7 points, a not-insignificant number. Additionally, “The annual inflation rate for August—which was 2.9%—would have been 2.2% without tariffs, the researchers said, putting the US much closer to the Federal Reserve’s inflation target of 2%. Instead, the costs for all sorts of everyday items, including goods produced domestically, have gone in the opposite direction due to tariffs.”
Marketplace.org reports, “When people buy fewer goods because tariffs make those goods more expensive, the job market feels the pinch, said Laura Veldkamp, an economics professor at Columbia Business School. ‘There are jobs like sales people… delivery people… the janitor of the store… And all of these will face less demand as well,’ she said. In a slower economy… employers don’t need as many workers. ‘And if they don’t want to hire new workers, and there’s less labor demand, they don’t have to offer as high wages to their existing workers, in order to keep them,’ she added.”
A report from the University of Chicago explains how inflation can actually make the job market seem hot, while the actual impact on wages and purchasing power suffers. That may feel contradictory, but the researchers looked at data from the Bureau of Labor Statistics and the US Census Bureau, as well as wage data from payroll processing company ADP. “They then developed an economic model of labor flows in the economy that built on existing versions by accounting for the ‘stickiness’ of wages—meaning they don’t immediately rise to keep up with inflation—and the fact that workers incur costs when they negotiate a raise or look for a new role… The model predicts that higher prices reduce the value of workers’ wages. Some workers may respond by renegotiating their contracts and others may find better-paying positions, leading to higher turnover. At the same time, because wages don’t rise as fast as inflation, labor effectively becomes cheaper for companies. This leads them to post more job openings, and because most people filling those roles are switching from an existing job, the unemployment rate holds steady.”
So what may look like a hot job market may not actually be drawing in new workers, but rather it’s like a game of musical chairs, according to the report.
The inflation problem may be lessening, according to the Peterson Institute for International Economics. PIIE’s analysis predicts that the spike of inflation caused by the 2025 trade war will stabilize and return to the baseline inflation rate for 2026. However, there’s an important caveat in their forecast: “Inflation rises 1 percentage point higher than baseline for the year from September 11, 2025. Inflation declines over time back to the baseline rate as the US Federal Reserve acts to balance the inflation surge with the initial growth slowdown. Although the inflation increase is temporary, the US price level remains higher thereafter than it would have been without the tariffs [emphasis added].”
So, once the tariff-fueled prices go up, they may not ever go back down, in other words. Investopedia shares this perspective: “Inflation may be going down, but those [lower] prices we remember at the grocery store, car dealerships, and department stores? They’re most likely gone forever. That’s because prices, on average, are a one-way ticket, generally rising over time, and falling only when something has gone wrong with the economy.”
One thing’s for sure… It's tough out there right now, both for businesses looking to stay healthy and those looking for jobs that pay well enough to cover the increased prices.
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