Trump’s 2025 tariffs to trigger fresh layoffs in 2026

President Donald Trump’s tariffs are biting more and more into companies’ bottom line.

The barrage of import taxes this year put in place by the Trump administration has contributed to an uncertain business environment due to their on-again, off-again nature. Employers, as a result, are hesitant to add more workers or expand their operations.

More companies instead are moving to shrink their headcount, according to the latest survey from the Institute for Supply Management released on Tuesday. That trend could continue going into 2026.

“We are starting to institute more permanent changes due to the tariff environment,” said one business executive in the transportation equipment sector. “This includes reduction of staff, new guidance to shareholders, and development of additional offshore manufacturing that would have otherwise been for U.S. export.”

The ISM Manufacturing index — which measures domestic manufacturing activity — fell for the ninth month in a row. It slid from 48.7 to 48.2, a sign that tariffs continue dragging down manufacturers. A score below 50 signals contraction in the manufacturing sector.

The labor market was dealt another jolt when the latest monthly data from payroll processor ADP published on Wednesday showed private employers had shed 32,000 jobs in November. Analysts were projecting a meager addition of 10,000 jobs.

“Larger companies are still hiring,” Heather Long, the chief economist at Navy Federal Credit Union, wrote on X. “Smaller firms (under 50 workers) are doing the layoffs. It’s been a very tough year for small biz due to tariffs and more selective spending from lower and middle-class consumers.”