The US job market showed signs of significant cooling in July 2025, as the Labor Department reported just 73,000 jobs added, far below the expected 115,000. This disappointing figure marks one of the weakest employment reports in over a year, triggering renewed concerns about the broader health of the American economy.

At the center of the discussion is former President Donald Trump, whose rising political momentum and hardline trade proposals are being cited by economists and business leaders as a major reason for the hiring slowdown.

Hiring momentum slows sharply

The Labor Department’s report, released on Friday, indicates that hiring decelerated across multiple sectors, including:

• Manufacturing

• Retail

• Transportation and Warehousing

• Construction

While healthcare and education showed some resilience, the overall picture was bleak.

The unemployment rate held steady at 4.1%, but wage growth slowed, and labour force participation dropped marginally — both signs of a cooling job market.

Businesses rattled by Trump’s trade rhetoric

Economists and industry associations point toward Donald Trump’s aggressive trade agenda as a key driver behind the caution displayed by employers.

As Trump ramps up his 2026 campaign, he has been promising steep tariffs on Chinese and Mexican goods, threatening to renegotiate trade pacts, and pulling back from multilateral economic agreements.

Many businesses are interpreting these signals as a return to protectionism, similar to what was seen during Trump’s first term. This has led to:

• Investment delays by firms dependent on global supply chains

• Uncertainty about input costs due to potential tariff hikes

• Lowered exports and reduced overseas demand for American goods

According to a recent survey by the National Association of Manufacturers, 63% of respondents cited trade policy uncertainty as a factor influencing their hiring and investment decisions in Q2 2025.

Economists express concern over outlook

“This is a warning sign,” said Lydia Chen, senior economist at Beacon Macro.

“We are seeing a real pullback in job creation, especially in trade-sensitive industries like manufacturing and logistics. The anticipation of tariffs and supply chain disruptions under a renewed Trump administration is already affecting business behavior.”

Analysts warn that if trade tensions escalate further — especially with China and Mexico — job growth could drop below 50,000 per month, raising the risk of a mild recession in early 2026.

Sector-wise breakdown of July hiring

• Manufacturing: Added only 2,000 jobs, compared to a monthly average of 15,000 earlier this year.

• Retail: Lost 8,000 jobs, as consumer sentiment and discretionary spending slowed.

• Warehousing and logistics: Added a mere 3,000 jobs, compared to 20,000 in the same month last year.

• Professional and business services: Added 22,000 jobs, showing some stability.

The only strong performer was healthcare, which added 36,000 jobs, buoyed by hospital expansions and an aging population.

Market and political reactions

The stock market reacted cautiously to the report. The Dow Jones Industrial Average dropped 172 points on Friday, while bond yields fell slightly, as traders factored in a weaker economic outlook.

On Capitol Hill, Democrats seized on the data to criticize Trump’s economic agenda.
“This is exactly what we feared — reckless trade posturing that hurts American workers,” said Senator Elizabeth Warren.

However, Trump’s campaign remained defiant, stating that:

“Temporary fluctuations are a small price to pay for restoring American sovereignty and bringing jobs back from overseas.”

His spokesperson added that **Trump’s new tariffs would “build resilience” and ultimately “reindustrialize America”.

Federal Reserve under pressure

The weak job numbers also put pressure on the Federal Reserve, which has been holding interest rates steady at 4.75% since March. Some analysts believe the central bank may now consider a rate cut later this year if job growth does not recover and inflation continues to moderate.

“The Fed cannot ignore these numbers,” said Jason Morales, an economist with CitiBank.

“If this becomes a trend, we could see a policy pivot sooner than expected.”

Businesses urge clarity and stability

Business groups are urging political leaders — especially Trump — to clarify trade intentions and avoid sudden shocks that could hurt confidence and hiring further.

The US Chamber of Commerce released a statement urging for “measured policies that preserve America’s competitive advantage without alienating trade partners.”

Several industry leaders have also called for:

• A clear roadmap on tariffs

• Support for small businesses exposed to import costs

• Incentives for domestic hiring without disrupting global trade flows

Conclusion

The July 2025 jobs report has served as a stark warning that political uncertainty, especially regarding aggressive trade policies, can have real-time impacts on employment and business sentiment.

As Trump’s campaign gains momentum, the economic consequences of his proposals are beginning to surface. The next few months will be crucial, not only for the future of US hiring but also for the direction of American trade and economic policy.

With the 2026 elections on the horizon, how voters and businesses respond to this shift — and how policymakers adjust — will shape the course of the US economy well into the next decade.