The US added only 73,000 jobs in July amid pressure from Trump's trade war.

Amid mounting pressure from Trump’s trade war, the US economy added just 73,000 jobs in July

July’s employment gains slowed markedly, highlighting growing concerns that President Trump’s tariffs are dampening trade, squeezing prices and constraining hiring.  

The US economy created just 73,000 jobs in July—well below the roughly 109,000 positions forecast by Bloomberg’s panel of economists. Meanwhile, the unemployment rate ticked up to 4.2 percent from June’s 4.1 percent. The Bureau of Labor Statistics also made deep downward revisions to recent payrolls, cutting May’s increase by 125,000 (from 144,000 to 19,000) and slashing June’s gains by 133,000 (from 147,000 to 14,000), for a combined shortfall of 258,000 jobs compared with earlier reports.  

Shortly after the jobs figures were released, President Trump announced he was removing Erika McEntarfer—the commissioner overseeing labor statistics—alleging without evidence that she had manipulated employment data ahead of last year’s election. On sectoral breakdown, health and social assistance added 73,300 positions, but those gains were more than offset by cuts to federal employment. Federal headcounts fell by 12,000 in July and have dropped by 84,000 since peaking in January.  

Thomas Ryan, North America economist at Capital Economics, noted that the three-month rolling average of job growth has plunged to just 35,000. He described that figure as “disturbingly low,” arguing it signals stagnating hiring even as population growth slows.  

In the days before the report, two Federal Reserve governors appointed by Trump publicly questioned a continued pause in rate cuts. Vice-Chair for Supervision Michelle Bowman warned the labor market is “becoming less dynamic and showing increasing signs of fragility,” suggesting that delaying a rate reduction could further hamper growth and employment. Governor Christopher Waller called the Fed’s stance “overly cautious,” insisting there was no justification for holding borrowing costs at current levels when the risk of a sharper downturn in the jobs market looms.  

President Trump—long critical of the Fed’s reluctance to ease policy—applauded both interventions and urged the central bank’s board to sideline Chairman Jerome Powell if he resists cutting rates.  

The disappointing jobs figures arrived amid a flurry of economic news. On Wednesday, the Bureau of Economic Analysis reported that second-quarter GDP rose at a 3 percent annualized rate, rebounding from a 0.5 percent contraction in the first quarter. Economists attribute the swing to firms front-loading imports before tariffs took effect and then scaling back shipments afterward.  

Despite that Q2 bounce, overall growth in the first half of the year was just 1.2 percent—well below the 2.5 percent pace seen in 2024. Also on Wednesday, the Fed opted to keep interest rates unchanged. Chairman Powell cautioned that while tariffs have begun to show up in some prices, the full impact on inflation and economic activity remains uncertain.