New York
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President Donald Trump has promised his high tariffs will inspire an American manufacturing renaissance.
Yet so far his controversial experiment has failed to inspire a jobs boom. Not only is hiring weak, but the industries most exposed to tariffs have been shedding workers – exactly the opposite of the intended outcome.
Job growth in tariff-impacted sectors including manufacturing, construction and transportation turned negative shortly after Trump started his trade war this spring, according to a new analysis by Apollo Global chief economist Torsten Slok.
Slok’s research, based on a three-month moving average of Bureau of Labor Statistics data on employment, shows that while tariff-impacted sectors had moments of job loss in recent years, this is the first time payroll growth is negative over a period of several months.
Employment in industries not affected by tariffs continues to increase, albeit at a slower pace than before the trade war.
“The tariff impact on hiring is now undeniable. The manufacturing renaissance, the hiring boom, is just not happening,” Joe Brusuelas, chief economist at RSM, told CNN.
Manufacturing employment has declined four months in a row, according to the August jobs report released last Friday. The US manufacturing industry has 78,000 fewer jobs than it did a year ago, BLS data shows.
Of course, tariffs were never going to dramatically increase manufacturing jobs overnight. It’s too early to say how the strategy will play out in the long run.
Still, some economists say the administration’s chaotic trade strategy is backfiring in at least two ways.
First, it has caused enormous uncertainty that has “paralyzed” manufacturers and other companies in tariff-exposed industries, causing them to pull back on hiring.
Secondly, tariff hikes on steel, aluminum, copper and other key inputs have raised prices for the same US manufacturers that are supposed to be benefiting from the trade agenda.
“It turns out the community of economists were correct that launching a trade war would result in slower growth and few jobs. That’s what is happening,” Brusuelas said.
“The Trump administration has embarked on the most aggressive pro-growth economic agenda in modern history, and our policies of tax cuts and rapid deregulation have already yielded trillions in historic investment commitments to make and hire in America,” White House Spokesman Kush Desai said.
The job loss in tariff-exposed industries has contributed to a broader slowdown in hiring across the US economy.
The pace of US job growth has slowed to just 29,000 over the past three months, down sharply from 105,000 during the prior three-month period, according to JPMorgan research. The unemployment rate remains low, but it has edged up from 4.1% in June to 4.3% in August – the highest since late 2021.
Losing confidence in landing a job
Americans are increasingly pessimistic about their prospects of getting a new job.
Consumers believe there’s just a 45% chance of finding a new job if they currently don’t have one, down from 51% in July, according to survey data released Monday by the New York Federal Reserve.
It’s the lowest reading since the survey launched in 2013 and much lower than readings during much of Trump’s first term in office. The NY Fed said the drop in expectations of finding a new job was “broad-based across age, education and income groups, but it was most pronounced for those with at most a high school education.”
Trump officials have dismissed the recent string of concerning economic reports, including Friday’s jobs report, and questioned their accuracy.
“We’re not going to do economic policy off of one number,” Treasury Secretary Scott Bessent told NBC’s “Meet the Press” in an interview that aired last weekend. “We believe that good policies are in place that are going to create good high-paying jobs for the American people.”
Bessent argued that Trump’s sweeping spending and tax cut law will eventually translate to an increase in construction and manufacturing jobs.
“It’s been a couple of months. And with the manufacturing sector, as you know, we can’t snap our fingers and have factories built,” Bessent said.
Beyond the trade war, some economists say the loss of jobs in tariff-exposed industries is linked to another Trump policy: the immigration crackdown.
Stephanie Roth, chief economist at Wolfe Research, said strength in native-born employment is “masking weakness” among foreign-born workers.
Although the monthly data on foreign-born employment can be volatile, the trends suggest the job market is suffering from a lower supply of workers.
Foreign-born employment dropped by 342,000 in August on a seasonally adjusted basis, building on a decline of 416,000 in July, according to Wolfe Research. So far this year, foreign-born employment is down by 1.5 million.
Some of the same sectors vulnerable to tariff and trade war uncertainty, such as construction, are also exposed to tougher immigration enforcement.
“The latest data is painting a picture of a slowing labor market, due to a combination of both supply and demand,” Roth said.
She is hopeful that some of the pressure on the job market will ease as businesses get greater clarity on where tariffs will settle, allowing for a rebound in hiring later this year.
“It’s more about the economic uncertainty than the tariffs themselves,” Roth said.