Roving Periscope: Trump has sown the wind; he may soon reap the whirlwind!
Virendra Pandit
New Delhi: US President Donald Trump’s erratic and radical trade and tariff policies have scared industries, businesses, and investors not only in other countries but also at home where the unemployment rate has increased to 4.2 percent as labour participation weakened, the media, quoting the US Labour Department, reported on Saturday.
Panicked employers have slowed down hiring sharply as businesses are paralyzing, raising doubts about the performance of the world’s largest economy.
Despite Trump’s daily boasts, America’s employers added just 73,000 jobs in July, the Labor Department reported on Friday, well short of the 115,000 expected.
Worse still, revisions shaved a stunning 258,000 jobs off May and June payrolls. And the unemployment rate ticked higher to 4.2 percent as Americans dropped out of the labour force and the ranks of the unemployed rose by 221,000, reports said. In simpler words, since cheap immigrant labour is diminished, businesses cannot afford local Americans’ higher wages and are reversing their expansion plans.
“A notable deterioration in US labour market conditions appears to be underway,” Scott Anderson, chief US economist at BMO Capital Markets, was quoted as saying.
“We have been forecasting this since the tariff and trade war erupted this spring, and more restrictive immigration restrictions were introduced. This (labour) report highlights the risk of a harder landing for the labour market.’”
Globally, economists, and trade experts have been warning that the rift with every US trading partner will begin to appear this summer; the Friday jobs report appeared to sound the alarm bell.
“We’re finally in the eye of the hurricane,” said Daniel Zhao, chief economist at Glassdoor. “After months of warning signs, the July jobs report confirms that the slowdown isn’t just approaching—it’s here.”
US markets, already reeling under the Trump turbulence, recoiled at the jobs report, and the Dow tumbled more than 600 points on Friday.
Furious at this exposure by his own administration’s Labour Department, President Trump called for the firing of Erika McEntarfer, the director of the fepartment’s Bureau of Labor Statistics, which compiles the jobs numbers.
“I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY,” Trump said on Truth Social. “She will be replaced with someone much more competent and qualified.”
He questioned the big revisions, but they are a standard part of the monthly jobs report. The department routinely updates as more data comes in. Since COVID-19, businesses have been taking longer to respond to the government’s survey on hiring. As more data has come in later than in the past, the potential for large revisions has increased.
Revelations in the new data raise questions about the health of the job market and the economy as Trump pushes forward an unorthodox overhaul of American trade policy as part of what he claims efforts to Make America Great Again (MAGA).
The President has junked decades of efforts made by the US and the World Trade Organization (WTO) to lower trade barriers globally, and has, instead, imposed unheard of ‘reciprocal tariffs’ and import duties on products from almost every country on the planet. He believes this would fill the US coffers, bring manufacturing back to America, and raise enough money to pay for the massive tax cuts he signed into law on July 4.
Mainstream economists, however, warned that the cost of the tariffs will be passed along to Americans, both businesses and households, who had voted for him.
This downward trend has started unfolding.
For example, Walmart, Procter & Gamble, Ford, Best Buy, Adidas, Nike, Mattel, Shein, Temu, Stanley Black & Decker, have all raised prices due to US tariffs. Economists at Goldman Sachs estimate that overseas exporters have absorbed just one-fifth of the rising costs from tariffs, while Americans and US businesses have picked up the lion’s share of the tab, the media reported.
Trump has sowed uncertainty in the erratic way he’s rolled the tariffs out — announcing, then suspending them, then coming up with new ones. Overnight, he signed an executive order that set new tariffs on a wide swath of US trading partners that go into effect on August 7, and that comes after a flurry of unexpected tariff-related acrobatics this week.
“There was a clear, significant, immediate tariff effect on the labour market and employment growth essentially stalled, as we were dealing with so much uncertainty about the outlook for the economy and for tariffs,” said Blerina Uruci, chief U.S. economist for the brokerage T. Rowe Price.
Guy Berger, senior fellow at the Burning Glass Institute, which studies employment trends, said, “Because of immigration policy, labour supply growth has nearly ground to a halt. So, we’re going to have very weak employment growth. And we look like southern Europe or Japan.”
Trump has sold the tariff hikes as a way to boost American manufacturing, but factories cut 11,000 jobs last month after shedding 15,000 in June and 11,000 in May. The federal government, where employment has been targeted by the Trump administration, lost 12,000 jobs. Jobs in administration and support fell by nearly 20,000.
Healthcare companies added 55,400 jobs last month – accounting for 76 percent of the jobs added in July and offering another sign that recent job gains have been narrowly concentrated.
The department originally reported that state and local governments had added 64,000 education jobs in June. The revisions on Friday slashed those jobs to less than 10,000.
Those revisions also revealed that the US economy has generated an average of just 85,000 jobs a month this year, barely half last year’s average of 168,000 and well below an average of 400,000 from 2021-2023 as the economy rebounded from COVID-19 lockups.
The current situation is a sharp reversal from the hiring boom of just three years ago, when desperate employers were handing out signing bonuses and introducing perks such as Fridays off, fertility benefits and even pet insurance to recruit and keep workers.
The rate of people quitting their jobs — a sign they’re confident they can land something better — has fallen from the record heights of 2021 and 2022 and is now weaker than before the pandemic.
