Image Description: A distressed man in office clothes sits on steps with his head in his hand next to a cardboard box of belongings, symbolizing job loss. Behind him, silhouettes of laid-off workers stand near government buildings, a rising tariff graph overlays the American flag with shipping containers, and Donald Trump is shown speaking at a podium.

By Marion Davis

The U.S. job market currently faces its most challenging period since the Great Recession, driven by a toxic combination of mass federal layoffs, illegal tariffs, and political chaos that has created unprecedented uncertainty for businesses and workers alike. With over 290,000 federal workers laid off by August 2025, tariff rates reaching their highest effective rates since 1933, and courts now ruling many of Trump's trade policies illegal, the American economy finds itself trapped in a web of policy-induced stagnation that extends far beyond typical economic cycles.

The Human Cost as Job Rejection Becomes a National Crisis

The job hunt for U.S. jobseekers is especially difficult this year, not only in terms of the numbers on fewer opportunities and new hurdles related to artificial intelligence but also in a sort of cultural gaslighting creating a psychological impact on many Americans. For jobseekers, they know all too well that this year is a difficult one to find employment. Dealing with rejection after rejection from positions flooded with resumes is already a difficult task.

Job rejection can trigger emotional pain, stress, and a sense of worthlessness, potentially leading to anxiety, depression, and burnout. This experience can erode self-esteem and confidence, making future job searches even more difficult. It's also associated with feelings of frustration, anger, and a perceived sense of failure, sometimes even leading to self-limiting beliefs or a desire to self-isolate as jobseekers may withdraw from social situations.

Data from sources like the U.S. Surgeon General and Gallup indicate that more and more people are experiencing isolation and loneliness in the U.S., with about half of all adults experiencing loneliness, a crisis officially declared by the Surgeon General. This trend predates the pandemic and has been exacerbated by it, leading to decreased face-to-face socializing across all demographics and a negative impact on individual and community health.

Political Chaos and the Erosion of Institutional Trust

After Trump's election win in 2024 that surprised the world, many U.S. voters in polls demonstrated a continued allegiance to their original vote for the second-term president despite a rocky 2025 with changes that evoked words from respondents such as "chaos." Messaging from the Republican Party has continually stated that Americans should rally around the mercurial head of state regardless of whatever decision is made for the day.

Notably, despite many Republican congresspersons holding skepticism secretly and a few voicing this skepticism openly, sources like The Atlantic have commented on the GOP showing little resistance for President Trump's movements. Likely, this is due to large news outlets and significant Republican influencers being quick to call out supposed dissenters who are voicing constructive criticism and concerns as well as Trump taking legal and administrative actions against those individuals ranging from critics to simple bearers of bad news.

Since re-entering office in January 2025, Trump and his administration have pursued legal and governmental actions against opponents and critics that have drawn multiple lawsuits and condemnation from legal experts and civil liberties. The legality of these actions is still under review. The American Civil Liberties Union (ACLU) warns that Trump's actions are hinting at a future, advanced use of a "politicized" Department of Justice to target anyone engaging in their right to free speech.

The McEntarfer Firing as Data Becomes Political

One recent notable firing was economist Erika McEntarfer, the Commissioner of the Bureau of Labor Statistics (BLS), the federal agency that produces the monthly jobs figures. Trump fired McEntarfer after a weak jobs report that was released in August 2025. Despite Dr. McEntarfer previously having received bipartisan support for her leadership, Trump accused her of "rigging" the numbers to make him look bad, pointing to the fact that McEntarfer had been initially appointed during Biden's administration as his sole evidence.

The Mass Federal Layoff Crisis

During Trump's first 100 days, the president signed 24 executive orders, 28 bills, and 22 presidential memoranda, with many of the bills being small-scale measures and regulatory rollbacks. Many of these involved harmful actions toward underrepresented communities such as slashes to NIH funding to grants on projects addressing healthcare gaps with a blacklist released for keywords including even the word "women."

Other actions were highly disruptive and left many out of work, such as the mass firing of government workers. These actions drastically impacted the job market. As of April 29, 2025, CNN noted that at least 121,000 federal workers have been laid off or targeted for layoff. Since then, some reports have suggested that over 290,000 federal civil service layoffs or voluntary separations have occurred by August 2025.

For reference, in the U.S., in 2024, the number of employed people aged 16 and over was approximately 161.3 million according to the BLS. Working based off of these numbers for some perspective, this means that approximately 0.2 percent of the entire employed workforce in the U.S. was fired or put in situations where quitting was encouraged within the first eight months of Trump's second term.

The Ripple Effect on Small Business

Loss of employment on a mass scale creates immense consumer fear that then negatively impacts direct-to-consumer (D2C) companies. With hustle culture growing in popularity, 2025 reports showed that one in four Americans has a side hustle. Many individuals have their own businesses that they are bootstrapping and paying expenses on through their primary job as a future investment. This creates employment and contract work opportunities in the business-to-business (B2B) world as well.

If approximately 0.2 percent of the entire employed U.S. population suddenly lost their primary income, this drastically impacts the small and mid-sized business world. This disruption in the form of a sudden spike in employed individuals losing their income is just one of many factors during the second Trump administration causing great uncertainty. Others include changing tariff percentages and import and export costs also bringing many business operations to a halt. 

The New York Jobs Report: A Canary in the Coal Mine

The abovementioned factors all came to a head with the New York jobs report in August 2025 where the New York Times reported that NYC-based companies had practically stopped hiring entirely in the first and second quarters of 2025 with fewer than 1,000 private-sector jobs being added, this number marking the slowest growth period in the labor market since 2003 outside of a recession and the pandemic.

When New York-based business owners were interviewed, they pointed to a decline in business opportunities and consumer purchases, escalating expenses for costs and goods, and ever-changing tariffs as their primary reason for putting hiring on hold.

The New York job report is notable as the number of jobs in the state can significantly affect the entire U.S. economy, primarily because the state is a massive economic engine and a global financial hub. Due to the state's size and influence, New York's economic performance serves as a leading indicator of national trends, which can influence investor confidence and monetary policy.

The Tariff Crisis as Hits Highest Rates Since 1933

The U.S. job market slowed significantly in the first half of 2025, with a sharp downward revision to previous months' payroll figures and a substantial slowdown in job growth by July 2025. In July, only 73,000 jobs were added, and the unemployment rate stood at 4.2 percent. CNBC reported that factors contributing to this slowdown include the impact of President Donald Trump's tariff policies, high interest rates, and immigration policies, leading to a stagnant labor market with fewer opportunities.

With our system of checks and balances, there has been particularly heavy battling between the executive and judicial branches of the government this year whereas the legislative branch with a Republican majority rarely has demonstrated public votes against policies initiated by Trump despite reported misgivings among congresspersons. Additionally, with Trump using executive orders heavily at a record-setting 147 orders in his first 100 days of office, these instigated changes bypassed Congress and could only be addressed by the judicial branch later via questioning the legality of these changes.

Many executive orders declared a national emergency due to factors claimed such as neighboring countries not taking action to prevent illegal fentanyl being trafficked across U.S. borders. President Trump then used this opportunity to begin leveraging tariffs against other nations.

The Legal Battle Over Tariff Authority

On August 29, 2025, an appeals court decision upheld a U.S. Court of International Trade ruling that President Trump's tariffs are illegal but permitted the tariffs to stay in place until October 14, 2025, to give the Trump administration time to appeal this decision up to the U.S. Supreme Court.

In light of the court ruling on August 29, 2025, the Council on Foreign Relations (CFR) published an in-depth article to discuss this significant legal challenge to Trump's tariff policies. The core legal issue is whether Congress intended to grant the president tariff authority under the International Emergency Economic Powers Act (IEEPA), which doesn't explicitly mention tariffs and was traditionally used for financial sanctions.

The ruling specifically affects "reciprocal" or "Liberation Day" tariffs put in place by President Trump shortly after entering office for his second term. This ruling addresses those tariffs imposed on Canada, China, and Mexico over fentanyl trafficking concerns. Meanwhile, sectoral tariffs on autos, steel, aluminum, and copper imposed under Section 232 authority remain unaffected but the legality of other tariffs may be explored next once the legislative branch has set an initial precedent.

Why the Supreme Court Will Likely Strike Down the Tariffs

There are significant legal weaknesses in Trump's position that he holds the power to set tariffs. Firstly, the International Emergency Economic Powers Act (IEEPA) that Trump used as the basis of his declaring a national emergency and then using this foundation to create tariffs did not create a solid foundation as the IEEPA lacks explicit tariff language and was designed for financial sanctions.

Furthermore, the statute's text doesn't support broad tariff authority, and Congress has historically maintained control over tariff policy through specific, limited delegations to the executive branch. Additionally, lower courts found that Trump's interpretation of the IEEPA would grant him "unlimited authority" if allowed, which creates a constitutional red flag, as our system requires checks and balances.

Considering party dynamics and how these play out in Congress, there likely is an expectation among the general population that President Trump would have significant support in the U.S. Supreme Court as Trump appointed three Justices to the U.S. Supreme Court during his first administration. These three appointments were filled by Neil Gorsuch, Brett Kavanaugh, and Amy Coney Barrett as vacancies arose during his first presidency.

Interestingly, however, the U.S. Supreme Court Justices serve for life, and political experts have interpreted Article III of the U.S. Constitution as creating life tenure for this role to ensure judicial independence from political pressures. In an article dating back from 2023, Barbara Perry, Ph.D., a professor of Presidential Studies at the University of Virginia conducted an in-depth analysis of whether Trump's nominees (now appointees) would vote against him in any disputes should the situation arise. Dr. Perry argues that history indicates a greater likelihood for yes.

With their life tenure, these Justices hold more protection against party and public pressure. They are likely to determine objectively the legality of Trump's use of executive orders to set tariffs without congressional approval based on the letter of the law.

The Economic Devastation of the 2025 Tariffs

In an extensive analysis on the impact of the tariffs set by President Trump, the Yale Budget Lab found devastating quantitative evidence of the tariffs' economic impact through August 2025. The key findings related to historic tariff levels, consumer impact, labor market damage, and GDP (Gross Domestic Product) contraction.

As far as historic tariff levels, the Yale group found that:

• The average effective tariff rate of 18.6 percent was the highest since 1933

• There had been a $2,400 average household income loss in the U.S. due to the tariffs with lower-income families hit the hardest proportionally

• There were predicted to be 505,000 fewer jobs by the end of 2025 with unemployment rising nearly a third of a percentage point

• There was a predicted half a percentage point reduction in growth as far as GDP through the end of 2025 and into 2026 with a long-term reduction in GDP of 0.4 percent

The $210 Billion Question: What Happens When Illegal Tariffs Are Reversed?

CNN reported that U.S. businesses have paid more than $210 billion as of late August 2025 to cover the Trump administration tariffs that U.S. courts have now declared illegal. Furthermore, CNN noted that Trump himself acknowledged on September 2, 2025, that if the Supreme Court upholds the lower court's decision, the U.S. Treasury would be required to refund the tariff revenue collected.

The question then is raised of how businesses typically behave when encountering sudden unexpected refunds versus if the businesses had been allowed to operate at lower percentages from the start. Do they splurge like some individuals when they get their tax refunds and drive up new job openings in sudden corporate re-investment and expansion efforts, or are these businesses more likely to utilize this money cautiously and a slow and steady tariff rate without changes from the onset of the year would have led to more job creation by this time of year?

Rebate Psychology vs. Retained Capital

Looking at rebate psychology versus retained capital, economic trends explain that businesses typically treat rebates as windfall gains, which leads to more conservative use of the funds, such as toward the reduction of debt and the building of cash reserves to weather another storm and will often delay investments rather than move to hiring immediately due to the nature of uncertainty.

In comparison, if these businesses had never needed to pay these funds into Trump's tariffs and had instead retained this capital, this revenue would have flowed with more certainty into operational needs, including payroll expansion, inventory, and growth investments.

Already, U.S. businesses were faced with needing to pay an effective rate of 18.6 percent for tariffs on what had been approximately 3.4 percent amounting to a total of $210 billion collected from U.S. businesses from what Trump declared Liberation Day on April 2, 2025, until the date of being liberated from these double-digit percentages that is set to take place on October 14, 2025, depending on how the U.S. Supreme Court rules.

Additionally, following the October 14, 2025, deadline, there is an expected timing lag of six to 18 months for rebate processing to return this more than $200 billion through the U.S. Treasury and customs systems, creating further delays in recovery for the U.S. economy.

The Role of Consumer Confidence in Economic Recovery

Objective facts are not the only aspect that affects the economy. Emotions have a significant impact as well. If consumers simply feel more confident about the future, they are more likely to spend. If business owners simply feel that there is about to be an uptick in the market, they are more likely to begin preparing by mobilizing business operations again. These two factors, among others, can play into each other.

Consumer confidence impacts the economy by influencing consumer spending. High confidence leads to increased spending on goods and services which stimulates economic activity while low confidence results in reduced spending and saving, potentially slowing economic growth. This spending then affects various sectors, from retail and manufacturing to construction and the stock market, influencing business revenue, investment, and ultimately, the overall health of the economy.

The main quantitative measurement of consumer confidence in the United States is the Consumer Confidence Index (CCI), and this CCI number will be an important metric to keep an eye on over the next few months into 2026.

Predicting a Recovery Timeline

Based on the trajectory outlined by sources addressing the ruling against the Trump administration tariffs, if Trump were to appeal the legality of his tariffs up to the Supreme Court, the Supreme Court is expected to rule to strike down IEEPA-based tariffs by late 2025 or early 2026. This would eliminate roughly 85% of current tariffs, dropping the effective rate from 18.6 percent back to approximately 3.4 percent and keeping only Section 232 tariffs on steel, aluminum, automobiles, auto parts, and copper.

Immediate Impact on Recovery

There would likely be an immediate impact in the first three months after a ruling striking down the tariffs. This might include a partial lift on hiring freezes as companies would resume posting positions that were delayed rather than eliminated. There might be input cost planning as businesses begin revising 2026 budgets with lower material costs.

The emotional impact would undoubtedly be immense at the consumer level as there already is a noticeable increase in activity in some areas such as small business owners posting for contractors on some platforms in anticipation of a boom. Psychological relief by the average American could drive modest spending increases even before rebates arrive.

Long-Term Recovery Period

For the overall long-term recovery period, after a ruling to strike down the tariffs, the negative impact outlined by the Yale data could begin to reverse as the 505,000 job deficit starts closing, but recovery rate depends on rebate timing.

Economists have explored the impact of past tariffs during trade wars. For instance, research on the trade war between the U.S. and China in 2018 and 2019 found that tariff costs far outweighed any benefits and instead contributed to a moderate level of job losses. However, as economists also highlight, more than just impacting certain sectors, what tariffs can also create is uncertainty, and uncertainty is damaging to an economy as everyone from business owners to consumers freeze in fear.

Lessons from History and Why Leadership Matters in Crisis

The isolation that jobseekers experience in a down market is even further worsened in a nation where the president is failing to be honest in his messaging about current economic conditions. In contrast, Franklin Delano Roosevelt made a similar commitment to Trump initially of making significant changes initially upon assuming office, in Roosevelt's case of taking action to combat the effects of the Great Depression.

In his first 100 days, FDR implemented the New Deal, passing significant legislation to combat the Great Depression through the Emergency Banking Act to stabilize the banking system and the National Recovery Administration for economic recovery. He also established programs for job creation, rural assistance, and financial regulation, including the creation of the Federal Deposit Insurance Corporation (FDIC), and ended Prohibition.

FDR's historic New Deal did not fully end the Great Depression. Instead, the massive industrial mobilization and military spending associated with World War II pulled the United States out of its decade-long economic crisis. While the New Deal provided crucial relief to millions, established essential programs like Social Security, and restored faith in the government, it did not eliminate high unemployment or end the Depression, which persisted until 1941.

The reality is that no head of state can singlehandedly rescue a nation during a global crisis, but a reasonable expectation is that the elected leader be honest, create supportive policies for the people, and create messaging that brings individuals together to involve all in positive change. There will always be ups and downs globally in economies, and a president should be the captain of the ship, communicating clearly with his crew and making strategies to focus on survival during the storms that will inevitably happen outside of his control.

The Path Forward

Ultimately, we can infer that one of the most influential factors in the post-ruling period on the tariffs is not just the policy itself but whether stability can be achieved, and upon this stability, whether consumer certainty can thrive.

While the Supreme Court striking down the tariffs would provide some relief, the broader economic headwinds—mass federal layoffs, consumer uncertainty, business investment hesitation—will likely persist. The legal victory may provide psychological relief to markets, but the underlying structural issues driving the job market slowdown remain largely unchanged as Trump's aggressive, legally questionable policies have created the very uncertainty that's stagnating business decision-making and job creation.

However, with the flurry of news announcements as of early September 2025 on the potential tariffs cancellations and their impact on the U.S. economy, it is clear that all eyes are watching what will take place between now and October 14, 2025, as the time period given to the Trump administration to either accept the ruling that the tariffs in question are illegal and take steps to reverse these tariffs or to appeal the ruling up to the Supreme Court.

The American economy stands at a crossroads. The path forward depends not just on legal rulings and policy reversals, but on whether the nation can restore the institutional trust and stability that forms the foundation of economic confidence. As the wheels of justice turn slowly, millions of American workers and businesses remain trapped in a web of uncertainty that extends far beyond any single policy decision.

 

Marion Davis is a contributing writer at EmployDiversity.com. She is a disabled DEIA consultant and writes on the value of diversity and inclusion across multiple industries, specifically as relates to disability and intersectionality.