Trump tariff cloud looms, U.S. companies hit the "brakes" on hiring

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In the United States, industries most deeply affected by trade turbulence have hit the brakes on hiring, and even begun layoffs, causing growth in the U.S. labor market to come to a standstill.

The latest jobs report for August released last week shows that the U.S. economy added only 22,000 jobs that month, with hiring slowing to a trickle. Goods-producing sectors affected by tariffs—such as manufacturing, wholesale and retail, and energy—have experienced a wave of layoffs in recent months.

On September 14, executives from these companies told the Financial Times that President Trump's sweeping tariff policies have led to rising costs, making it difficult for them to formulate expansion plans, which is the main reason for layoffs and the slowdown in hiring.

A weak job market has also changed market expectations. Economists believe the likelihood of a Fed rate cut at this week's meeting is rising. Fed Chair Powell said last month that slower job growth could offset the inflationary impact brought by Trump's comprehensive tariff regime.

“These tariffs are just a drain for American manufacturers like us, with no benefit at all,” said Julie Robbins, CEO of Ohio-based guitar effects maker EarthQuaker Devices. “It’s a sudden tax that hinders our ability to hire and grow.” She disclosed that the company has entered a de facto hiring freeze.

Manufacturing and Energy Industries Bear the Brunt

Behind the bleak employment figures lies the plight of specific industries. According to the U.S. Bureau of Labor Statistics (BLS), manufacturing lost 12,000 jobs in August, bringing the total number of manufacturing job losses this year to 78,000. Mining, including oil and gas, lost 6,000 jobs in August, while wholesale trade has shed 32,000 jobs this year.

Industrial giant John Deere said last month that tariffs have cost it $300 million as of 2025, and that this figure could double by the end of the year. The company also announced layoffs of 238 workers at its Illinois and Iowa plants, with third-quarter net income down 26% year-on-year. Similarly, the U.S. oil industry has also been hard-hit by rising steel and equipment costs caused by tariffs. According to BLS data, at least 4,000 people have left the industry since January.

Uncertainty Causes Companies to “Hold Back”

In addition to direct cost shocks, the uncertainty created by the oscillating policies has become the biggest obstacle to business decision-making. Traci Tapani, CEO of metal manufacturing company Wyoming Machine, said, “Our current strategy is that when an employee leaves, we don't fill the vacancy.”

This “wait-and-see” attitude is widespread among businesses. Texas oilman Bryan Sheffield noted that the uncertainty brought by tariffs makes it harder for oil and gas CEOs to make capital spending decisions. Many business leaders admit they can't hire or expand until policies stabilize and costs become predictable.

Trump Administration: Tariffs Bolstered Employment

Despite widespread complaints in the business community, the Trump administration is sticking to its position. Treasury Secretary Mnuchin said, "For every John Deere, there are some companies telling us that 'tariffs have helped our business, and we're increasing capital spending and employment.'" The U.S. government believes tariffs will ultimately prompt companies to bring business back to the U.S., resulting in a surge in jobs.

There are also some voices in the market supporting tariffs. Michelle Feinberg, founder of New York Embroidery Studio, a New York-based fashion contract manufacturer, although planning layoffs and automation in the short-term, still supports tariff policies aimed at helping domestic manufacturers from a macro perspective.

However, Michael Madowitz, chief economist at the Roosevelt Institute, believes that the weakness in manufacturing is not a labor supply issue, but rather “the victim of slowing demand and unresolved, dramatic policy changes.”

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