Key Points
- President Trump’s tariffs in 2025 slowed down hiring but did not cause a major spike in overall prices.
- The average monthly job growth last year was the lowest in decades outside of a recession.
- The unemployment rate rose to 4.4%. The uncertainty caused by the tariffs has led businesses to pause hiring plans.
- Most companies have absorbed the higher tariff costs themselves, which has helped keep inflation low.
When President Trump unleashed a wave of new tariffs last year, many economists predicted a double whammy of higher prices and rising unemployment. As we look back on 2_025, it seems they were only half right. While the tariffs did slow down the job market, they didn’t cause the runaway inflation that many had feared.
Overall price increases were surprisingly tame last year, even though the cost of some specific imports, such as beef and coffee, did increase. The big impact was on jobs. The average monthly job growth in 2_025 was the lowest we’ve seen in decades outside of a recession, and the unemployment rate ticked up to 4.4%.
The main reason for this is a word we’ve heard a lot this year: uncertainty. With President Trump constantly changing his mind on tariff rates and targets, businesses have been in a state of paralysis. Instead of hiring new workers, they’ve paused their plans, waiting to see what will happen next.
“There’s no compelling reason to be out there hiring en masse,” said one economist. “That is a rational response when you’re dealing with this kind of uncertainty.”
The tariffs have also made it harder for businesses to turn a profit. For the most part, companies have absorbed the higher costs themselves rather than passing them on to consumers. This has helped keep inflation in check, but it’s also squeezed their margins and made them even more hesitant to invest and expand.
The story isn’t over yet. The Supreme Court is set to rule on a landmark case that could invalidate Trump’s most significant tariffs. If that happens, companies could receive substantial refunds, which would be a significant boost to their bottom lines. But for now, the age of uncertainty continues, and the job market is paying the price.
