Corporate Profits Soar as Tariff-Driven Job Cuts Widen Gap

Gary Cohn, former director of President Donald Trump’s National Economic Council, has attributed the deteriorating job market to the administration’s tariff policies, arguing that rising input costs are compelling businesses to cut labor expenses. In an interview on Face the Nation, Cohn explained that companies, unable to pass on higher costs to consumers, are reducing workforces to maintain profit margins. This trend has coincided with a sharp slowdown in job growth, as the U.S. added just 22,000 jobs in August 2025, down from 79,000 in July, according to the Bureau of Labor Statistics.

Cohn highlighted a shift in corporate behavior from post-pandemic “labor hoarding” to aggressive cost-cutting. Companies are now allowing workforces to shrink naturally as older employees retire, rather than replacing them. This reversal follows a period of hiring frenzies during the pandemic, when businesses competed to retain talent. “We went from a hoarding labor situation to a situation today where companies are being very aggressive about managing their expenses,” Cohn stated.

The Federal Reserve responded to the weakening labor market by cutting interest rates by 0.25 percentage points in September 2025, its first reduction since December 2024. Fed Chair Jerome Powell acknowledged the risks to employment, noting that “kids coming out of college and minorities are having a hard time finding jobs.” Powell also signaled potential for two more rate cuts in 2025, though the Fed’s dual mandate of controlling inflation and supporting employment remains a balancing act.

While the White House defended Trump-era tariffs, arguing they spurred $3 trillion in domestic investment and job creation, Cohn countered that the policy has strained businesses. Corporate revenues grew 6.3% in Q2 2025, but profits surged even more sharply, underscoring a widening gap between corporate performance and worker outcomes. The administration’s dismissal of recent jobs data—including the firing of former BLS commissioner Erika McEntarfer after a weak July report—further complicates the labor market narrative.

The impact of automation and AI adoption has exacerbated job market pressures, particularly for entry-level roles. According to a Stanford study cited in CNBC, AI models are displacing entry-level workers in tech and marketing, while younger workers face prolonged job searches. Meanwhile, major tech firms like Google, Microsoft, and Meta have laid off nearly 90,000 employees in 2025 alone, per Layoffs.fyi. Cohn emphasized that the job market’s degradation is “across the board,” not limited to tech, as companies prioritize cost control.

The Federal Reserve’s rate cut and projected further reductions aim to stimulate hiring, but analysts remain cautious. Morningstar noted that the Fed’s projections assume a gradual easing of inflation, though tariffs and supply shocks could prolong price pressures. The central bank’s independence has also come under scrutiny amid political pressure from the Trump administration, which has replaced multiple Fed board members with allies, including Stephen Miran, a Trump economic adviser. Miran’s advocacy for aggressive rate cuts aligns with the president’s push to bolster economic activity.

Cohn concluded that the job market’s current challenges are “likely temporary,” but the degradation is already evident. With corporate profits rising and hiring freezes in place, workers—particularly Gen Z graduates and minorities—face an increasingly competitive landscape. The Federal Open Market Committee’s plans for additional rate cuts in 2025 may provide some relief, but the path to recovery remains uncertain amid structural shifts in labor demand and policy-driven economic pressures.

Source: [1] Former Trump economic adviser Gary Cohn says tariffs are why (https://fortune.com/2025/09/22/gary-cohn-tariffs-trump-economic-advisor-jobs-layoffs-tech-economy/)

[2] Former Trump economic official Gary Cohn says "we've seen the …" (https://www.cbsnews.com/news/gary-cohn-ibm-trump-labor-market-face-the-nation-09-21-2025/)

[3] Fed Cuts Rates and Signals More to Come in 2025 - Morningstar (https://www.morningstar.com/economy/fed-cuts-rates-signals-more-come-2025)

[4] Fed lowers interest rates by 0.25 percentage points in first cut … (https://www.cbsnews.com/news/federal-reserve-fomc-meeting-today-rate-cut-september-2025-powell-impact/)

[5] As U.S. jobs disappear, the Federal Reserve returns to … (https://www.cnbc.com/2025/09/17/as-us-jobs-disappear-the-federal-reserve-returns-to-rate-cuts.html?msockid=1891d6bcf52567af3fd0c0ccf4d866f7)

[6] Gary Cohn: Tariffs and Job Implications (https://www.markets.com/news/economic-outlook-job-market-challenges-1119-en-EU/)

[7] Former Trump economic adviser Gary Cohn says tariffs are the (https://www.aol.com/finance/former-trump-economic-adviser-gary-160000861.html)