WASHINGTON — The U.S. labor market showed signs of cooling in April, as job growth slowed and concerns deepened over the economic toll of President Donald Trump’s escalating tariff war, which economists warn could soon tip the country into a downturn.
The economy added 177,000 non farm payroll jobs last month, according to the Labor Department’s Bureau of Labor Statistics report released on May 2. That figure represents a slight decline from the downwardly revised 185,000 jobs added in March. The unemployment rate held steady at 4.2 percent.
While April’s hiring beat economists’ median forecast of 130,000 jobs, the broader outlook is increasingly fragile. Analysts say the data has yet to reflect the impact of the Trump administration’s aggressive trade measures, which have injected volatility into financial markets and frozen corporate decision-making.
Mr. Trump’s so-called “Liberation Day” tariffs have sharply raised duties on imports from key trading partners, most notably hiking levies on Chinese goods to 145 percent. The move triggered retaliatory measures from Beijing and heightened fears of a full-scale trade war. A temporary 90-day delay on reciprocal tariffs has done little to ease business anxiety.
“The delay functionally stalled the economy,” said one economist. “Companies are in a holding pattern, unsure how to plan.”
Despite a resilient labor market bolstered by employers’ reluctance to part with hard-won post-pandemic workers, warning signs are mounting. Business confidence continues to slide, and major corporations are scaling back.
On May 1, General Motors slashed its 2025 earnings outlook, citing an expected $4 to $5 billion hit from new tariffs. Meanwhile, Chinese regulators have told domestic airlines to halt Boeing aircraft purchases, and Ryanair has threatened to cancel hundreds of future orders if costs climb due to the tariff battle.
The labor market, economists warn, may soon feel the pinch more acutely. “We’ll likely see reductions in hours worked before mass layoffs,” said one labor market analyst. Several major surveys—including those from the Institute for Supply Management, the Conference Board, and the University of Michigan—paint a grim picture, showing sharp drops in business sentiment and consumer confidence.
Adding to the uncertainty is the Trump administration’s controversial campaign to aggressively downsize the federal government. Led by tech mogul Elon Musk and the Department of Government Efficiency (DOGE), the initiative has introduced sweeping funding cuts and mass layoffs across public agencies.
With pressure mounting, the Federal Reserve is expected to maintain its benchmark interest rate at 4.25%–4.50% during its upcoming meeting, as it weighs the competing forces of inflation risk and a potential recession.