How Trump’s tariffs are impacting the private sector labor market

Every time a politician claims that tariffs are making America stronger, it’s worth asking who exactly is getting stronger. Because if you talk to employers, especially those in the private sector, you’ll hear a very different story. While tariffs may be sold to the public as a tool to protect domestic jobs, what we’re really seeing is a quiet tax on businesses and, more importantly, on workers. And the longer we ignore the real costs, the more people will find themselves bent under the weight of lost opportunities, rising prices, and declining job security.

Tariffs don’t fall out of the sky. They’re not paid by foreign companies. They’re paid by American importers—many of them small and mid-sized businesses—who then pass the added cost down the line. It’s like adding a surcharge on top of every component, every finished good, every transaction. When the price of doing business rises, something has to give. Maybe it’s hiring. Maybe it’s wages. Often, it’s jobs.

In recent months, we’ve seen employers in retail, manufacturing, and transportation quietly shed headcount or freeze hiring altogether, citing input costs that have ballooned thanks to Trump-era and newly proposed tariffs. Inflation in materials and equipment often hits high-volume hiring employers first and hardest—think warehouse operators, logistics firms, and manufacturers. That means layoffs or slower growth right at the bottom of the labor market, where many early-career and entry-level workers get their start.

The knock-on effect isn’t just higher prices on store shelves. It’s also fewer jobs being advertised, fewer hours on the schedule, and longer unemployment lines in communities that can’t afford them.

But to be fair—and I do mean fair—not all of the long-term effects of tariffs are necessarily negative.

If tariffs truly succeed in shifting production back to the U.S., we could see a modest increase in domestic manufacturing employment over time. That could mean higher wages in select sectors, especially if the supply of labor is further constrained by restrictions on immigration. Fewer workers competing for the same jobs often translates into better bargaining power for those already in the workforce. And if reshoring happens at scale, some communities may benefit from new industrial investments—though that’s a big “if.”

Still, we have to be clear-eyed. The reshoring of manufacturing is a slow, expensive process. The pain comes first—lost jobs, higher costs, global retaliation—while the potential gains take years, sometimes decades, to materialize. And there’s no guarantee they ever will. In the meantime, the private sector—especially employers who rely on imports or sell goods abroad—pays the price upfront.

Employers don’t make hiring decisions in a vacuum. They look at margins. They look at demand. They look at risk. Tariffs introduce more cost and more uncertainty into that equation. The end result? Fewer listings, fewer interviews, fewer job offers.

If the goal is to build a stronger American economy, let’s not confuse economic nationalism with economic health. We need policies that strengthen the private sector, not punish it. Tariffs may sound tough, but for too many businesses and workers, they feel more like a heavy burden strapped to their backs. And no one grows stronger by being crushed.

To gain further insight, we reached out to nine hiring experts to get their opinions on whether the tariffs are likely to have positive or negative impacts on private sector employment, and whether those impacts are short- or long-term.

• Private Sector Cautiously Awaits Policy Clarity
• Trump’s Policies Reshape Workplace Diversity Efforts
• Presidential Policies Impact Industries Differently
• Private Sector Employment Remains Largely Stable
• Companies Tighten Hiring and Firing Practices
• Labor Pool Expands Amid Economic Uncertainty
• Businesses Hesitate Amid Political Uncertainty
• Government Talent Influx Benefits Private Sector
• Companies Emphasize Values in Hiring Process

Private Sector Cautiously Awaits Policy Clarity

So far, the impact isn’t showing up as layoffs or mass hiring freezes in the private sector. However, we are seeing hesitation, especially in roles that rely on regulatory clarity such as legal, compliance, government-facing operations, and any position that touches federal contracts or funding. In these areas, employers are slowing offers, pausing hiring, or shifting roles into contractor-only status until they receive more policy direction.

Looking ahead, I think the biggest impact won’t be direct but behavioral. Uncertainty at the top leads to caution at the bottom. If leadership changes lead to shifts in labor policy, tax incentives, or contractor classification rules, we’ll likely see companies rethink how they structure their workforce entirely. But right now, it’s a waiting game, and that’s enough to slow growth plans.

Stephen Greet, CEO & Co-Founder, BeamJobs

Trump’s Policies Reshape Workplace Diversity Efforts

Since President Trump’s return to office on January 20, 2025, his administration has implemented policies that are beginning to influence hiring and firing practices in the private sector. Notably, the administration has rescinded Executive Order 11246, which previously prohibited federal contractors from engaging in employment discrimination based on race, color, religion, sex, sexual orientation, gender identity, or national origin, and mandated affirmative action programs to promote equal employment opportunities. The revocation of this order has led to concerns about the potential erosion of workplace diversity and inclusion efforts within organizations that contract with the federal government.

The administration’s stance on tariffs, including proposals for broad-based tariffs on imports, has also raised concerns about potential job losses in the private sector. A report by Goldman Sachs indicates that such tariffs could lead to a net decrease in employment, particularly affecting industries reliant on imports and consumer spending.

In the coming months and years, these policy shifts may result in increased uncertainty for businesses, potentially affecting hiring decisions and employment stability. Companies may need to adapt to new regulatory environments and market conditions, which could influence their workforce strategies and employment practices.

Kalim Khan, Co-founder & Senior Partner, Affinity Law

Presidential Policies Impact Industries Differently

In my opinion, presidential policies definitely don’t affect all businesses the same way. Different industries, sizes of companies, and even their locations all see different impacts. Big corporations often see some policies help them while others hurt them, depending on things like taxes and regulations.

Sectors that may see employment growth would likely include those aligned with stated policy priorities: potentially traditional energy, defense contractors, and infrastructure construction if those align with the administration’s focus. Conversely, industries facing more regulatory scrutiny or less favorable policy treatment might reduce hiring or implement selective layoffs as they adjust to new business conditions.

For non-profits, employment impacts often depend on government funding priorities and tax policies affecting charitable giving. Organizations whose missions align with administration priorities might expand, while those focused on areas receiving less support could face funding challenges that affect their ability to maintain staffing levels.

Small businesses typically experience more indirect effects from presidential policies, feeling impacts through changes in consumer confidence, interest rates, healthcare costs, and regulatory compliance burdens. The employment effects here are usually more gradual and often vary significantly by region and industry.

One consistent pattern across administrations is that policy uncertainty itself can temporarily slow hiring decisions as businesses adopt a “wait and see” approach until the practical implications of new policies become clearer. This could mean a period of cautious hiring in the early months of the administration, particularly in industries most likely to be affected by potential policy changes.

It’s worth noting that broader economic factors like technological change, demographic shifts, and global economic conditions often have more substantial impacts on private sector employment than presidential policies alone. The administration’s policies interact with these factors rather than operating in isolation.

Matt Bowman, Founder, Thrive Local

Private Sector Employment Remains Largely Stable

While Donald Trump’s return to the presidency has brought renewed attention to federal hiring and firing practices, particularly within government agencies, the broader impact on non-government employment–such as in corporations, non-profits, and small businesses–remains limited and largely indirect so far. It’s natural for political shifts to create a sense of uncertainty, but in reality, the employment landscape for the private sector is influenced more by long-term economic trends, regulatory environments, and market forces than by any single administration.

To date, the most visible changes have involved executive orders and proposed policies affecting federal employment structures, such as reinstating or expanding Schedule F, which seeks to reclassify certain federal employees to make them easier to replace. However, these efforts are still being debated and challenged, and their scope is confined to government workers. The ripple effects into private employment practices have been minimal.

For businesses outside of government, the key takeaway is to stay calm and grounded. Political climates shift, often quickly, and while certain sectors may feel more direct impacts–such as defense contractors, healthcare providers, or industries tied to federal regulation–the core drivers of hiring and firing in most organizations are tied to revenue, talent strategy, and organizational goals. Labor laws, such as those governing wrongful termination, workplace protections, and at-will employment, remain governed by a mix of federal and state-level legislation that does not change overnight.

Looking ahead, there may be indirect influences as policies around trade, immigration, or taxation evolve. For instance, changes in visa programs could impact hiring in tech or academia, while corporate tax policy could affect expansion plans and workforce investment. However, these shifts tend to play out gradually and are often tempered by institutional checks and balances.

The most important thing for employers and employees alike is to focus on fundamentals: building resilient cultures, investing in upskilling, and maintaining compliance with current employment laws. Institutions, especially in the private sector, have shown time and again that they are durable. Leadership may change, but sound strategy, strong HR practices, and a long-term outlook will remain the most reliable tools for navigating change–regardless of who is in office.

Joe Benson, Cofounder, Eversite

Companies Tighten Hiring and Firing Practices

The immediate impact has been an increase in employer caution around documentation and cause-based terminations. When executive signals emphasize deregulation or private employer discretion, companies feel emboldened to tighten hiring practices and more aggressively cut underperformers without as much fear of administrative intervention. There might be a 20 percent rise in employment agreement rewrites that expand at-will clauses and narrow severance eligibility. Small businesses with 50 or fewer employees are pivoting fastest because they feel enforcement shifts quicker than large corporations, which move slower through compliance departments.

Over the next 12 to 24 months, it is probable that there will be a rise in contested termination claims at the state court level where protections hinge more on contractual interpretation than federal oversight. Companies that scale quickly without updating HR protocols will find themselves exposed to retaliation or discrimination claims if they rely too heavily on perceived loosened restrictions. Policy shifts at the top rarely change the fundamental risk at the operational level. Documentation, fair treatment, and objective performance standards remain the guardrails for firing decisions no matter who controls federal enforcement desks.

Shane Lucado, Esq., Founder & CEO, InPerSuit™

Labor Pool Expands Amid Economic Uncertainty

There are many more applicants available for administrative, scientific, and social service roles. This is good news for businesses seeking this kind of talent. However, economic uncertainty means that fewer companies are taking advantage of this labor pool right now. The possibility that things could change in four years with the next administration is also causing people to hesitate.

Hayden Cohen, CEO, Hire With Near

Businesses Hesitate Amid Political Uncertainty

The shakeups happening in the government since Trump came back into office haven’t directly changed how we hire in the private sector, but the atmosphere around it has definitely shifted. There’s more caution, and more pausing before greenlighting new roles, especially in small and midsize businesses. At Neolithic Materials, we’re still growing and still bringing people in, but I’ve noticed more conversations where someone on the team brings up concerns about long-term policy direction or economic stability. It’s not panic; it’s more of a quiet hesitation. People are watching and waiting, and that slows things down in a way that’s hard to quantify but easy to feel.

What worries me more than the hiring slowdowns is how that uncertainty affects career growth internally. If companies aren’t sure where things are headed, they’re less likely to offer training, less likely to turn contracts into full-time roles, and more likely to delay promotions. That doesn’t just hurt the business long-term; it wears down morale. You can see it most in early-career folks who are hungry to grow but stuck in a holding pattern. We’ve made a conscious decision to keep investing in our people even during uncertain times because you can’t build anything lasting if you’re always reacting to the headlines.

Erwin Gutenkunst, President and Owner, Neolithic Materials

Government Talent Influx Benefits Private Sector

For many companies that work with government agencies like ours, there is going to be a wealth of talent available soon. Having employees who have worked within different government sectors can be very beneficial to us because we need people who know how the inner workings of different government agencies actually function. It’s having someone on our side who knows the insider information we need to secure an award, extend a new contract past the testing phases, or have the contacts to get us on the shortlist for consideration.

Ben Walker, CEO, Ditto Transcripts

Companies Emphasize Values in Hiring Process

Trump’s presidency has created a more polarized political climate, and this has led to some companies rethinking their hiring practices, especially when it comes to political neutrality and corporate values. In some industries, there’s a noticeable increase in businesses emphasizing values alignment during the recruitment process. As companies face growing scrutiny from both employees and customers, they are becoming more cautious about who they hire and how they communicate their stance on various political and social issues.

From what I’ve seen, some employers have even adjusted their internal policies to ensure that they are not seen as supporting one side of the political spectrum over another. These adjustments have impacted how candidates are screened, with a stronger emphasis on cultural fit and shared values. This change can create challenges for young professionals entering the workforce, as it introduces a new layer of expectations in the hiring process that goes beyond qualifications and experience. For many, this means understanding not only the technical aspects of the job but also how their personal values align with the company’s mission.

Elizabeth Lawrence, Managing Editor, MAGA.com