President Donald Trump’s tariffs, aimed at replacing American jobs lost to overseas manufacturing, could instead lead to job cuts at home, according to recent statements from business executives and economic forecasters.
The labor market is already in a “no layoffs, no jobs” situation, and there are growing concerns that tariffs on U.S. imports will raise operating costs and force companies to cut payrolls.
For example, respondents to the Institute for Supply Management’s survey on factory conditions in November expressed increased levels of concern.
“We’re starting to implement more permanent changes because of the customs environment,” said one transportation equipment executive. “This includes job cuts, new guidance for shareholders, and the development of additional overseas manufacturing that would have been destined for U.S. export.”
ISM surveys identify respondents by industry rather than by name.
Similar comments were found elsewhere in the report, showing that the ISM Manufacturing Index is moving further into territory that suggests business conditions are deteriorating. The headline 48.2% represents the percentage of companies reporting expansion, while less than 50% indicates contraction.
The survey’s employment index fell two points to 44%, its lowest reading since August and consistent with a slow but sustained labor market softening trend.
There were other signs of a bleak labor situation heading into 2026.
President Trump has strongly pushed for energy exploration and expanded use of fossil fuels. However, ISM respondents in the oil and coal industry reported that, “While there are no significant changes at this time, we expect to see significant changes in cash flow and headcount heading into 2026. The company has sold off most of its free cash generating businesses while offering voluntary severance packages to everyone.”
A manager in the electrical equipment, home appliances and parts business said the tariffs were creating a tougher operating environment than during the coronavirus crisis.
“The situation is tougher than during the coronavirus pandemic in terms of supply chain uncertainty,” the respondent said.
contradictory signals
Indeed, broader economic conditions remain fairly stable.
According to the Atlanta Fed, gross domestic product (GDP) grew at an annual rate of 3.9% in the third quarter. Additionally, hiring was stronger than expected in September, with nonfarm payrolls increasing by 119,000 despite signs that large employers are cutting jobs. In late October, for example, Amazon joined other large employers in announcing layoffs, cutting up to 30,000 jobs.
Tuesday’s report from the 38-nation Organization for Economic Co-operation and Development showed that the tariffs had not yet devastated the global economy, but warned that the full impact could still be forthcoming.
“The impact of the tariff increases has not yet been fully reflected in the U.S. economy,” the Paris-based OECD report said. “The price of U.S. imports subject to tariffs has declined sharply,” the report said, “suggesting that tariffs are impacting demand and will continue to weigh on trade volumes until the announced tariffs take full effect.”
These types of risks pose challenges for the labor market in the year ahead.
The Federal Reserve’s economic report released last week also noted that employment had “decreased modestly” over the past seven weeks or so, but that manufacturing “tariffs and tariff uncertainty continue to be a headwind.”
The Cleveland Fed’s comments reflected both sides of the tariff coin, saying, “One large retailer’s average costs were up about 20% year-over-year due to the tariffs, and it was considering how to allocate this increase. In contrast, another large retailer said the impact of the tariffs was stable and did not expect further cost increases.”
