The tariffs of 2025: Did they really hurt Americans' jobs more than their wallets? It's a question that has sparked debate, and the answer, as we'll see, is complex. Let's dive in!
When former President Donald Trump introduced new tariffs last year, many economists predicted a surge in both prices and unemployment. Now, with most of the 2025 economic data in, it seems those predictions were only partially accurate.
While the prices of certain imported goods, such as beef, coffee, and tomatoes, did increase significantly last year, overall price hikes remained relatively stable. However, the job market painted a different picture.
The average monthly job growth in 2025 was the lowest in decades, excluding recession years. Furthermore, the unemployment rate rose by 0.4 percentage points to 4.4% over the year, according to the December jobs report.
Even though the job market was already tightening before 2025, Trump's extensive tariffs and subsequent adjustments didn't help. The uncertainty surrounding his next move caused businesses to pause hiring plans or, in some cases, lay off workers.
"There's no compelling reason to be out there hiring en masse," explained University of Central Florida economist Sean Snaith. "That is a rational response when you're dealing with this kind of uncertainty."
Tariffs also changed how businesses calculated profitability.
"Companies are seeing higher prices, depressing profitability; and in terms of new investment, they're hesitant because tariffs make a lot of investments that have been profitable unprofitable," said Dean Baker, a senior economist at the Center for Economic and Policy Research.
Customers also postponed purchases due to the fluctuating tariff levels. The Federal Reserve Bank of Richmond noted in its recent Beige Book that several manufacturing contacts "said that their customers reduced new orders due to uncertainty about tariffs."
And this is the part most people miss: It's not just customers who are confused. Trump's unpredictable trade policy left businesses in a state of paralysis. They mostly absorbed higher tariffs without passing those costs onto consumers, which helped keep inflation in check.
But here's where it gets controversial... That could change depending on how the Supreme Court rules in a landmark tariff case that could invalidate Trump's most significant levies. If that happens, companies could get massive refunds for the tariff costs they've already paid, although that process could take a lot of time to sort out.
Ultimately, the relatively muted price increases and the slower hiring, though they might seem contradictory, come down to the same thing: uncertainty.
What are your thoughts on this? Do you think the impact on jobs was more significant than the impact on prices? Share your opinions in the comments below!
