Trump's Tariffs Criticized for Harming U.S. Job Market, Layoffs Surge

In a recent interview, the former economic advisor to President Trump criticized the administration's tariff policies, asserting that they have significantly harmed the U.S. job market. The advisor highlighted that tariffs have increased the cost of doing business, making it more challenging for Americans to find employment. Businesses, feeling the pressure of rising input costs, are reluctant to pass these costs onto consumers through price increases. Instead, they are opting to control costs by reducing labor expenses.

This perspective contrasts sharply with the White House's stance. A previous statement from the White House claimed that Trump's tariff measures have led to tens of billions of dollars in investments within the U.S., creating jobs for Americans. The administration emphasized its focus on implementing supply-side growth policies, such as tax cuts, deregulation, and energy abundance, to lower costs and revive the economic vigor experienced during Trump's first term.

However, the advisor pointed out the recent wave of layoffs in major tech companies, including Microsoft and Meta. These layoffs, totaling nearly 90,000 employees across 204 companies this year alone, are already impacting the economy. Recent employment data from the Bureau of Labor Statistics showed that only 22,000 new jobs were added in August, a significant drop from the 79,000 jobs added in July. In response, the Federal Reserve lowered interest rates by 0.25 percentage points last week to curb this trend and stimulate the economy.

Even Federal Reserve Chairman Powell acknowledged the increasing difficulty in finding jobs, particularly for recent graduates from the Z generation, as companies halt hiring. Powell admitted that recent graduates, young people, and minorities are finding it particularly challenging to secure employment. This trend marks a reversal from the hiring frenzy during the COVID-19 pandemic, when many companies were aggressively recruiting. Now, as workers retire, these companies are allowing their workforce to naturally decrease.

The advisor noted that companies, having emerged from the difficulties of the pandemic, were initially concerned about attracting and retaining talent, leading to a stockpiling of labor. However, the current situation sees companies actively managing expenses, with labor costs being a controllable area. Despite current corporate performance, with second-quarter earnings growing by 6.3% and profits increasing by double digits, both hard data and anecdotal evidence indicate a deteriorating job market.

While this situation may be temporary, the reality is that the job market is worsening. The advisor's critique underscores the broader economic implications of tariff policies, highlighting the need for a balanced approach that considers both short-term economic gains and long-term sustainability. The ongoing debate between economic advisors and the administration reflects the complex nature of trade policies and their far-reaching effects on the U.S. economy.