President Trump faces growing concern among business leaders, prior to his new administration's first employment report.
Many economic forecasts show that the US has seen a slight increase in unemployment rate last month, adding around 150,000 jobs.
But Trump's new tariffs, massive firing of federal workers, increased inflation and slowing economic growth will overturn the market by increasing uncertainty and interest ahead of the release of the Labor Bureau's report.
The Dow Jones Industrial Average on Thursday ended with a loss of 400 points, down 1% that day. The Nasdaq Composite fell 2.6% that day, sinking 10% past its recent peak and entering the correction area. The S&P 500 index fell by 1.8%.
“Today was the day when the horrors of growth turned into reality,” Callie Cox, chief market strategist at Ritholtz Wealth Management, said in an interview Thursday.
Cox said the sale on Thursday was driven primarily by a disappointing surge in corporate layoffs reported by employer challenger Grager and Christmas.
According to a Challenger Report released Thursday, US companies cut more than 172,000 jobs in February. This was the most common in any month since July 2020. It also had the highest number of layoffs in February since 2009.
Cox said the Challenger Report is not about “Endall, Beall… setting us in a volatile way for the main event tomorrow.”
“This week was all about investors looking at policy-related pressures in these tariffs, economic pressures in the data that's coming out. And that's a concern.”
Trump allowed a 25% tariff on Canadian and Mexican imports to come into effect Tuesday, temporarily exempting North American automakers on Wednesday, and delaying more new taxes on Thursday.
As of Thursday afternoon, Trump had waived all Canadian and Mexican products complying with the US-Mexico-Canada Trade Agreement (USMCA).
However, the exemption will only last until April 2, when Trump is set to impose mutual tariffs on countries that have imposed their own import taxes on US goods.
“On April 2nd, we will move to mutual tariffs, and we hope Mexico and Canada will do a good job with fentanyl and this part of the conversation will be off the table.
Countries where Canada, Mexico and other countries are suffering from Trump's tariffs are responding with their own measures.
Ontario Prime Minister Doug Ford said in an interview with Fox Business Network's “Craman Countdown” on Thursday that his province will impose a “25% tariff on electricity coming from Ontario to Michigan, New York and Minnesota.” The tariffs affect a total of 13 states.
The speed, scale and inconsistency of Trump's tariffs make it difficult for businesses to plan this year, experts say. The lack of a clear way for Canada and Mexico to release tariffs has also caused confusion.
Trump and his top officials are linking his new tariffs to various goals. Reviving US manufacturing, bringing fair economic ties and enforcing Canada and Mexico to crack down on drug trafficking and migration.
However, the administration has not publicly identified the specific thresholds Canada and Mexico must reach to end tariffs.
“If the target is not well defined, it is difficult to measure progress and predict the end of a tariff,” an analyst at S&P Global Ratings wrote in the analysis.
“Uncertainty around US tariff policies (and more generally US policies) has skyrocketed to levels seen only during the pandemic and the global financial crisis. These uncertainties lead to lower demand and lower growth rates as businesses seek to keep investments and households spending on durable goods.”
Some Trump allies have acknowledged rising economic pressures in the job market. They also endure unfortunate reports of their work, holding the Biden administration responsible.
Fox Business host Larry Kudlow, who was director of Trump's National Economic Council in his first term, predicted on Wednesday that the US would need to “suffer” its bad February employment report, despite the fact that the report is actually estimated to show profits for the month.
“The very smart people say the number of jobs that come out, the February job numbers that come out on Fridays are flat and even negative,” Kudlow said while interviewing Agriculture Secretary Brooke Rollins on his eponymous show at Fox Business.
“My general point here is that you need to suffer through some bad news about affordability and the economy. This has nothing to do with Trump. There is no Trump program yet! And I have people on the left who are blaming Trump. How can you blame Trump when Trump wasn't president when these seeds were planted?” Kudrow said.
Monthly employment reports are generally considered delays in economic indicators, and Cox admitted in 2024 that the job market was already beginning to weaken.
“In a high-interest environment, the economy is much more vulnerable to unexpected events and can shake the ground beneath us, and it appears that this happened in the fog of this policy.
“If the economy hasn't pushed high interest rates for several years, we might be somewhere else, and I think it's actually very unfortunate,” she added.
“For a while we thought we had a soft landing, but now we see that there are quite a large bump on the road.
