When President Donald Trump imposed sweeping tariffs on imported goods, the stated goal was straightforward: protect American jobs and bring manufacturing back to U.S. shores. But as 2025 ends and the tariff regime takes full effect, corporate executives and economists are warning that the opposite may be happening.

The delayed impact of tariffs is now hitting businesses hard, and some are responding not by hiring domestically but by cutting American workers to offset higher operating costs.

The Numbers Tell the Story

Under the current tariff structure, the weighted average applied tariff rate on all imports has risen to 15.8%—and the average effective tariff rate stands at 11.2%, the highest level since 1943.

For American households, this translates to a real cost. The Trump tariffs amount to an average tax increase of $1,100 per household in 2025, rising to $1,400 per household in 2026, according to economic analyses.

But for businesses, the equation is even more concerning. Rising input costs, disrupted supply chains, and retaliatory measures from trading partners are squeezing margins in ways that many companies cannot absorb through price increases alone.

Companies Signal Coming Cuts

According to CNBC reporting, concerns are mounting that tariff duties on U.S. imports will raise operating costs to the point where companies have no choice but to pare their employment rolls.

"The impacts of higher tariff rates are yet to be fully felt in the U.S. economy."

— OECD Economic Outlook

The Organization for Economic Cooperation and Development noted a "sharp decrease in the value of U.S. imported goods subject to tariffs," suggesting that businesses are already pulling back on purchases—a precursor to broader cost-cutting that typically includes workforce reductions.

Several dynamics are converging to create a perfect storm for American workers:

  • Higher material costs: Manufacturers dependent on imported components face input cost increases they cannot fully pass to customers in a competitive market.
  • Retaliatory tariffs: U.S. agricultural and manufacturing exporters have lost access to key markets, particularly in China, leading to farm bankruptcies and factory closures.
  • Supply chain disruption: Companies that spent years optimizing global supply chains now face the costly prospect of restructuring—with no guarantee the new arrangements will be more efficient.
  • Margin compression: Businesses unable to raise prices enough to cover tariff costs are seeing profit margins shrink, leaving labor costs as one of the few remaining levers to pull.

2026: More Tariffs, More Pain?

The outlook for next year offers little relief. Several tariffs are scheduled to increase further:

  • The 25% tariff on upholstered furniture rises to 30% on January 1, 2026
  • Bathroom vanities and kitchen cabinets currently at 25% jump to 50% on January 1, 2026
  • The Trump administration has signaled pharmaceutical tariffs could potentially rise toward 200% by mid-to-late 2026

Each escalation adds to the cost pressures businesses face—and increases the likelihood that those pressures will translate into job cuts.

The Legal Wild Card

One factor could disrupt the entire tariff regime: the U.S. Supreme Court is currently evaluating the legality of President Trump's decision to impose sweeping tariffs under the International Economic Emergency Powers Act (IEEPA). A ruling is expected in early 2026.

If the Court declares the tariffs unlawful, the administration could lose authority to collect duties and might need to return revenues already received. Such a ruling would provide relief to businesses—but would also create new uncertainty as companies scramble to adapt to yet another policy shift.

What Workers Can Do

For American workers concerned about job security in tariff-exposed industries, financial advisors suggest several protective steps:

Build emergency savings: Aim for three to six months of expenses in an easily accessible account. With high-yield savings accounts still paying near 4% APY, this money can work for you while providing a safety net.

Diversify income streams: Consider developing skills that translate across industries or pursuing side income that could grow if primary employment is disrupted.

Assess your industry's exposure: Workers in manufacturing, retail, and agriculture may face higher risk than those in services or technology. Understanding your sector's tariff exposure can inform career planning.

Update your resume: Even if layoffs seem unlikely at your employer, being prepared to pivot quickly is prudent in an uncertain environment.

The Broader Economic Question

The Penn Wharton Budget Model projects that Trump's tariffs could reduce GDP by approximately 8% and wages by 7% over time, with a middle-income household facing a $58,000 lifetime loss.

These projections remain debated—GDP has continued to grow despite many economists' predictions of a slowdown—but they underscore the stakes involved in trade policy decisions that affect millions of American workers and families.

As 2026 begins, the gap between the tariffs' stated goal of job creation and their emerging reality of job destruction may become increasingly difficult to ignore.