Moody’s Analytics chief economist Mark Zandi warned the labor market is stagnating and placed part of the blame on President Donald Trump’s tariffs.
Since Trump shocked global markets with his “Liberation Day” tariffs in April, there has been no job growth, Zandi said, adding that subsequent revisions will likely show net declines.
“This reflects the direct effects of the tariffs on manufacturing, transportation and distribution, and ag-related businesses, which are steadily losing jobs, as well as the indirect uncertainty hit to hiring by most other businesses,” he explained.
Indeed, trade-exposed industries suffered steep losses last year. The manufacturing sector, for example, has hemorrhaged 70,000 jobs since April. Tens of thousands have also been lost in mining and logging as well as warehousing.
Meanwhile, the health care and social services are among the few industries that are hiring steadily. Without those two sectors, the U.S. economy would have seen payrolls drop for the year.
“Other factors are certainly at play, including highly restrictive immigration policies, DOGE cuts, and artificial intelligence; however, the global trade war’s fingerprints are all over the ailing job market,” Zandi added. “Thus, the fastest way to boost the job market would be for the Supreme Court to declare the reciprocal tariffs unlawful and for lawmakers to let them become a thing of the past.”
Justices are expected to hand down a decision any day now on Trump’s ability to impose tariffs under the International Emergency Economic Powers Act (IEEPA).
That law has been used for the bulk of Trump’s trade war, including the so-called reciprocal tariffs and fentanyl-related duties. The administration has also leveraged the IEEPA tariffs to secure trade deals with the European Union, Japan, South Korea and others.
But if the Supreme Court rules against Trump, that won’t put an end to his tariff regime. Other levies are based on separate laws and aren’t under consideration at the high court.
New tariffs could also be imposed outside IEEPA, though those would take longer to roll out with some offering only shorter periods to tax imports.
While administration officials have expressed confidence that they have alternate ways to enact tariffs, Trump may not immediately jump at the chance.
