Tariffs may have cost the U.S. economy nearly 20,000 jobs per month this year, according to new research from the Federal Reserve Bank of Kansas City that provides the first comprehensive look at employment impacts from recent trade policies.
The analysis estimates that without direct tariff effects, the economy could have added 19,000 more jobs each month, on average, from January through August 2025. That’s enough to potentially raise the unemployment rate by 0.1 percentage points — a modest but meaningful drag on job creation during a period when monthly employment growth already slowed dramatically.
Tariffs and Job Creation: A Complicated Relationship
Monthly job growth in the U.S. economy dropped from approximately 170,000 per month in 2024 to just 75,000 per month through August 2025, coinciding with the implementation of higher import taxes. The Kansas City Fed found that sectors more exposed to imports experienced slower job growth than those with lower import exposure.
“Overall, our findings suggest — at least thus far — domestic firms might have added fewer jobs in response to tariffs, similar to the employment effects of the 2018 tariffs,” the economists concluded in their report.
The findings challenge the notion that tariffs primarily benefit domestic employment. Instead, they suggest that higher input costs and supply chain disruptions may outweigh any protective benefits for American workers in import-competing industries.
Regional Economic Impacts Vary
How have these effects played out across different regions? The Federal Reserve’s Beige Book, which tracks economic conditions across Fed districts, noted that nearly all districts reported tariff-related price increases earlier this year, particularly affecting input prices for manufacturers.
By November, however, some materials prices had begun declining in the Kansas City district specifically. This was attributed to sluggish demand, deferred tariff implementation, or reduced tariff rates in certain sectors.
The Kansas City district also experienced flat economic activity and modest employment declines during this period — consistent with the broader employment effects identified in the Fed’s research.
Looking Forward: Economic Implications
Could these job impacts worsen if tariffs remain in place? Economists are divided, but the Kansas City Fed’s research suggests the employment effects have been significant enough to warrant attention from policymakers.
The estimated 19,000 monthly job loss figure represents just under 0.1% of total nonfarm employment — not catastrophic, but meaningful in an economy where job growth has already slowed considerably from its post-pandemic pace.
“The findings align with what we saw during previous rounds of tariffs,” said Mark Zandi, chief economist at Moody’s Analytics, who was not involved in the study. “Higher tariffs create winners and losers, but in aggregate, they tend to be a net negative for employment.”
The research adds to a growing body of evidence that trade restrictions can create complicated ripple effects throughout the economy. While certain protected industries might benefit, downstream manufacturers facing higher input costs and companies vulnerable to retaliatory tariffs often suffer.
For now, the Kansas City Fed’s economists have provided what might be the clearest picture yet of how recent trade policies are affecting American workers — and the picture suggests headwinds rather than tailwinds for job creation.
