The Hidden Cost of Tariffs: Jobs Suffer More Than Wallets

Updated by Faith Barbara N Ruhinda at 1422 EAT on Saturday 10 January 2026

As President Donald Trump imposed new tariffs last year, many economists warned that both prices and unemployment could rise. With most of the 2025 economic data now in, their forecasts appear partially correct.

While prices for certain imports — including beef, coffee, and tomatoes — rose sharply, overall consumer price increases remained largely muted. The job market, however, told a different story.

Average monthly job growth in 2025 was the slowest in decades outside of recession years. Meanwhile, the unemployment rate rose 0.4 percentage points to 4.4%, according to the December jobs report released Friday.

Although the job market had already been tightening heading into 2025, President Trump’s sweeping tariffs — along with numerous subsequent adjustments — have done little to ease the pressure.

“There’s no compelling reason to be out there hiring en masse,” said University of Central Florida economist Sean Snaith. “That is a rational response when you’re dealing with this kind of uncertainty.”
Tariffs have also reshaped how businesses assess profitability.

“Companies are seeing higher prices, which depresses profitability, and when it comes to new investment, they’re hesitant because tariffs have made many previously profitable projects unprofitable,” said Dean Baker, senior economist at the Center for Economic and Policy Research.

Customers, too, are delaying purchases amid the back-and-forth on tariff levels. The Federal Reserve Bank of Richmond noted in its recent Beige Book — a compilation of business anecdotes — that several manufacturing contacts reported their customers had reduced new orders due to uncertainty about tariffs.

The confusion extends to businesses themselves. Trump’s unpredictable trade policies have left many in a state of paralysis. For the most part, companies have absorbed higher tariffs rather than passing the costs on to consumers, a factor that has helped keep inflation in check.

That could change, however, depending on how the Supreme Court rules in a landmark tariff case that could strike down some of Trump’s most significant levies. If the court rules in favor, companies could even receive substantial refunds for tariffs they have already paid, though the process could take considerable time to resolve.

Ultimately, the combination of relatively muted price increases and slower hiring — though they may appear to tell different stories — stems from the same underlying factor: uncertainty.

– (CNN)

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