Trump’s Tariff Policy Is Now Showing Up in the Jobs Data

President Trump’s aggressive expansion of trade taxes is weakening the economy, and the latest labor market revision makes that harder to ignore.

In 2025 alone, previously reported payroll figures were revised down by 1,029,000 jobs. That is the largest annual downward revision in at least two decades.

More than one million jobs that were initially reported as created simply were not there.

When job growth is overstated by that magnitude, it signals that the economy is not as strong as advertised. And when that weakness coincides with sweeping new tariffs from the Trump administration, policymakers should connect the dots.

Trade Taxes Reduce Growth

Tariffs are taxes on trade. When the federal government imposes them, American importers pay the tax. Those costs move through the economy in the form of higher consumer prices, lower business margins, delayed investment, and more cautious hiring.

The Congressional Budget Office estimates that 95 percent of President Trump’s tariffs will pass through to the U.S. economy and ultimately to American consumers. These tariffs now affect roughly 61 percent of all U.S. imports.

CBO’s analysis is direct about the consequences. The tariffs will:

• Reduce investment

• Reduce employment

• Lower efficiency

• Lower the level of GDP

  
  

Supporters of protectionism often claim foreign governments bear the burden. The data do not support that claim. The overwhelming share of the cost falls on Americans.

Higher input costs make U.S. manufacturers less competitive. Retailers face more expensive inventory. Expansion plans slow. Hiring decisions become more cautious.

That is how a less efficient economy produces weaker job growth.

The 2025 Revision Is a Warning Sign

A downward revision of 1,029,000 jobs in a single year is not routine noise. The typical annual revision is roughly 300,000 jobs. The 2025 adjustment was more than three times that norm.

This is not a minor technical correction. It is a substantial reassessment of economic performance.

If the labor market were truly robust, revisions would not be this dramatic. Instead, the data now suggest that employment growth was significantly weaker than initially reported during a period marked by escalating trade taxes.

Tariffs do not strengthen the economy. They raise costs and reduce efficiency. Over time, those effects show up in slower output and fewer job opportunities.

CFE Takeaway

Strong job growth requires a competitive and efficient economy. That means lower barriers to trade, competitive tax policy, and predictable rules that reward investment.

Trade taxes move in the opposite direction. They function as tax increases on productive activity. Tax increases tend to reduce the activity they target.

The 2025 jobs revision should serve as a wake-up call. Policymakers should reduce the cost burdens weighing on the economy rather than expand them.