Updated May 2, 2025 at 7:57 PM CDT
U.S. employment market softened somewhat amid intensified trade conflict under Trump's administration.
The hiring scene took a slight dip in April, as President Trump's trade battle started causing ripples across the broader economy.
U.S. employers added 177,000 jobs last month, according to figures released Friday by the Labor Department – a drop that's relatively minor compared to the previous month when there were 185,000 new jobs added. This slip was smaller than predicted, given the intensifying president's trade war. The unemployment rate remained constant at 4.2%, despite half-a-million people joining or rejoining the workforce.
April witnessed job growth in healthcare services, restaurants, and warehousing sectors, while the federal government continued to shed workers. The employment gains for February and March were revised down by a total of 58,000 jobs.
The president announced sweeping tariffs at the beginning of last month. Although some of these import taxes have since been suspended, the average tariff rate currently is at its highest since at least the Great Depression. Experts at the International Monetary Fund anticipate these tariffs will lead to higher prices and slowed economic expansion.
The trade war has already left a mark on the stock market. As of Thursday, the S&P 500 index was down approximately 6.5% from inauguration day. Trump's tariffs have also shaken up consumers, who are increasingly pessimistic about the economic outlook. An index of consumer confidence fell in April to its lowest level since the pandemic started.
Manufacturers in Trouble
Manufacturers, many of whom require imports for processing or raw materials, are grappling with the situation. The sector shed 1000 jobs in April.
A survey by the Institute for Supply Management found that factory orders and output declined in April, while prices increased. Factory managers' biggest concern – by far – was tariffs.
"We're on the edge of a cliff," said Tim Fiore, who oversees the monthly survey. "Hopefully we won't go over it, but the signs right now are not positive, for sure."
The U.S. economy was already struggling when Trump announced the widespread tariffs on April 2. Economic output shrank in the first quarter of the year as businesses and households prepared for the looming trade war.
The health of the job market plays a crucial role in determining whether the economy continues to shrink or begins to recuperate. As long as people are working and earning a living, they'll be able to maintain spending, which largely drives the economy. If employment drops significantly or people are fearful of losing their jobs, they may become more hesitant to spend, potentially pushing the economy into recession.
Average wages in April were up 3.8% year-on-year. This rate is substantial enough to outpace rising costs.
- The rising tariffs, initially announced by President Trump, are anticipated to lead to higher prices and slowed economic expansion, according to experts at the International Monetary Fund.
- The manufacturing sector, reliant on imports for processing or raw materials, has been struggling due to the trade war. Factory managers, particularly concerned about tariffs, reported declines in factory orders, output, and increased prices.
- The health of the job market is critical in determining if the economy starts to recover from its current struggles or continues to shrink. Given that employment gains were seen in sectors such as healthcare services, restaurants, and warehousing, while the federal government continued to shed workers, it remains uncertain whether the average job market participant will be able to continue maintaining spending and thus drive economic growth.
