The U.S. economy delivered a stronger-than-expected jobs report for March, adding 228,000 nonfarm payrolls despite growing economic uncertainty. However, economists warn that President Donald Trump’s aggressive trade policies could reverse recent employment gains in the near future.
Job Growth Outpaces Forecasts
According to the Labor Department’s latest report, the economy added 228,000 jobs in March, a sharp increase from February’s revised figure of 117,000. This exceeded analysts’ expectations, as economists surveyed by Reuters had predicted just 135,000 new jobs.
Despite the positive headline, the unemployment rate rose slightly to 4.2%, up from 4.1% in February. Still, a tight labor market and low layoffs continue to support steady wage growth, helping maintain the current economic expansion.
Trade Tensions Cast a Shadow
Yet, all eyes are on the potential fallout from the Trump administration’s sweeping import tariffs. On Wednesday, Trump announced a 10% minimum tariff on most goods entering the United States. This move triggered global backlash and threatened retaliatory measures from trade partners.
Economists suggest these new tariffs have pushed the effective U.S. tariff rate to its highest level in over 100 years. Supply chains may become increasingly tangled, pushing prices higher and possibly leading to job losses if consumer and business spending falters.
“Businesses have been hesitant to hire because of an uncertain trade policy,” one analyst noted. That hesitation could soon turn into workforce reductions if the tariffs’ economic ripple effects begin to hit.
Recession Risks Rise
Sentiment surveys and economic indicators show the U.S. economy may have stalled during the first quarter of the year. Some estimates place gross domestic product (GDP) growth below a 0.5% annualized rate, with a real chance of contraction.
The threat of a recession within the next year is no longer being ruled out by many economists. April’s employment report could be the first to reveal any meaningful downturn triggered by the tariff policies. Retail jobs are particularly vulnerable as higher prices force consumers to pull back on spending.
Market Response and Federal Reserve Outlook
While the strong March jobs data could bring temporary relief to investors, broader market sentiment remains shaky. The return of Trump’s tariff strategy has unnerved businesses that once celebrated his 2016 election victory.
Markets are already anticipating that the Federal Reserve may resume interest rate cuts by June, following a pause in January. Fed officials have projected two rate cuts in 2025. Currently, the benchmark policy rate stands in the 4.25% to 4.50% range.
As financial markets around the world struggle to adapt to the United States’ protectionist turn, the strength of the U.S. labor market may soon face its toughest test yet.