The calm before the tariff storm?
The US economy delivered a surprising jolt of strength in March, adding 228,000 jobs—well above expectations—but rising trade tensions and sweeping new tariffs from president Donald Trump are clouding the outlook for the months ahead.
The jobs report, released Friday by the Bureau of Labor Statistics, showed broad-based hiring across sectors including healthcare, transportation, and hospitality. Retail also rebounded with the return of striking supermarket workers. The unemployment rate ticked up slightly to 4.2% as 232,000 people entered the labor force—a development seen as a sign of growing confidence among job seekers.
“The labor market’s surprising spring surge likely cements the Fed’s ‘wait-and-see’ stance on rate cuts,” said Sam Williamson, senior economist at First American. “The broad-based March surge in jobs came as more people joined the labor force, causing a slight uptick in the unemployment rate.” He noted the current rate matches the Fed’s long-run projection and remains below its 2025 forecast of 4.4%.
Wages also continued to climb, with average hourly earnings rising 0.3% month-over-month and 3.8% year-over-year.
A pre-storm snapshot
President Trump’s announcement last week of a 10% minimum tariff on most imported goods has already shaken global markets and prompted retaliation from major trade partners, a report from Reuters noted. Economists worry the fallout will hit hiring, investment, and consumer confidence in the coming months.
“Today’s employment report feels more dated and backward-looking than usual,” said Michael Pugliese of Wells Fargo. “The sharp escalation in trade tensions this week has fundamentally altered the economic outlook.”
Investopedia’s preview of the report predicted a slowdown to 140,000 new jobs from 151,000 in February, citing rising uncertainty as businesses face unclear policy signals, higher import costs, and elevated interest rates. “Although recent consumer surveys show households are bracing for a worsening job market, forecasters say unemployment claims have remained relatively low, suggesting tariffs have not yet led to mass layoffs,” Investopedia noted.
The Trump administration’s effort to slash federal jobs through the Department of Government Efficiency has added to economic jitters, even as courts slow the pace of layoffs, Reuters highlighted.
Cautious optimism
Federal Reserve chair Jerome Powell noted the tariffs are “larger than expected,” adding “the same is likely to be true of the economic effects, which will include higher inflation and slower growth.”
“Were it not for this week’s tariff news, today’s numbers could have been seen as a Goldilocks report of solid job growth alongside moderating wage inflation trends,” said Michael Feroli, chief US economist at JPMorgan.
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