A pending Supreme Court decision on President Donald Trump’s tariff authority could play a decisive role in reversing the slowdown in US hiring, according to one of the country’s most closely watched economic forecasters.
Mark Zandi, chief economist at Moody’s Analytics, warned that the labor market has effectively stalled in the months following the administration’s sweeping trade actions. In his view, a ruling that curtails those tariffs may offer the quickest path to restoring job growth at a time when other policy tools are limited.
A Labor Market Losing Momentum
The warning follows a December jobs report that underscored the economy’s loss of momentum. Payrolls increased by just 50,000 positions in the final month of the year, while the unemployment rate edged down to 4.4 percent. For all of 2025, employers added 584,000 jobs, a steep drop from the roughly 2 million positions created in 2024 and the weakest annual total outside of a recession since the early 2000s.
Zandi argues that the slowdown coincides closely with the rollout of the administration’s so-called Liberation Day tariffs in April. Since then, he says, job growth has flatlined, and forthcoming revisions to the data may show that employment has actually declined.
“The timing is hard to ignore,” Zandi wrote in a recent post, pointing to the direct impact of higher trade barriers on industries that depend heavily on global supply chains, as well as the indirect effect of uncertainty on corporate hiring decisions.
Trade-Exposed Industries Feel the Strain
Manufacturing has borne the brunt of the adjustment. The sector has lost an estimated 70,000 jobs since April, reflecting reduced export competitiveness and higher input costs. Mining, logging, transportation, and warehousing have also shed tens of thousands of positions as trade volumes slowed.
Without steady hiring in health care and social services, two sectors largely insulated from trade policy, overall employment would have declined outright in 2025. Their gains have masked broader weakness across much of the private economy.
Zandi acknowledged that tariffs are not the sole factor weighing on hiring. Restrictive immigration policies, cuts associated with the Department of Government Efficiency, and the accelerating adoption of artificial intelligence have also reshaped labor demand. Still, he said the global trade war’s “fingerprints are all over” the current jobs picture.
Why the Supreme Court Matters
At the center of the debate is the administration’s use of emergency powers to impose broad tariffs without congressional approval. The Supreme Court of the United States is expected to rule soon on whether those actions exceeded presidential authority under existing law.
A decision against the administration would not dismantle the entire tariff regime. Some levies are based on separate statutes and would remain in place. Even so, Zandi believes that striking down the reciprocal tariffs imposed under emergency powers would deliver a meaningful confidence boost to businesses and investors.
In his view, removing that layer of uncertainty could prompt firms to restart delayed hiring plans, particularly in manufacturing and logistics. “The fastest way to boost the job market would be for the reciprocal tariffs to become a thing of the past,” he said.
Limits and Political Realities
Administration officials have signaled that alternative legal pathways exist to impose new tariffs if the court rules against them. Those options, however, would typically require longer timelines and may offer only temporary authority to tax imports.
There is also a political dimension. As affordability concerns have moved to the forefront for lawmakers, the White House has already eased or delayed tariffs on certain consumer staples, including coffee, pasta, and furniture. That shift suggests an awareness of the domestic costs associated with prolonged trade restrictions.
Even if the Supreme Court narrows presidential tariff powers, the broader debate over trade policy is unlikely to end. For now, economists and markets alike are watching closely, with the labor market hanging in the balance.
