June unemployment numbers will be out today. Experts expect a 3.8% unemployment rate and the addition of 200,000 jobs. The employment situation has not been this good since 2000. However, there is a good chance the improvement will not continue.
Among the reasons that the economy could shed more jobs than it adds this month, ironically, is that there are not many people left to hire. At what economists call “full employment,” how many companies need any new workers at all?
However, the primary reason the jobs rally could end, and end very quickly, is tariffs. Some industries have companies that already have started to cut jobs or publicly contemplate the need to. The largest nail company in the country says high costs for the goods it needs to make its product could prompt it to close down. A related industry, construction, faces rising prices due to tariffs, and not just because of nails.
China could hit the soybean industry very hard. China is the largest importer of soybeans, and the United States is the largest producer. The farmers affected probably will not show up in the regular “nonfarm” payrolls announced each month. However, they will be stricken anyway. General Motors Co. (NYSE: GM) workers could show up in the numbers this month or very shortly. Its CEO has warned that tariffs on cars could cause it to cease production. The car industry is one of the largest in America.
Another struggling industry could be badly hurt by tariffs. The Trump administration has put tariffs on newsprint brought in from Canada. Newspaper executives say if this has been added to advertising and subscription revenue erosion, they will start to post losses or already tiny margins will get smaller. As an example: The Tampa Bay Times has laid off as many as 50 workers because its publisher says newsprint costs have risen $3 million. This is not a large number, but industry by industry, the layoffs will pile up.
Tariffs will hit American employment. Some of the most significant tariffs go into effect today. Based on comments by leaders of industries threatened most financially, the layoffs will start right away.