MAGA Economics Is Losing
Trump promised that protectionism and immigration enforcement would be good for the economy. The latest jobs report tells a different story.
President Donald Trump's "Make America Great Again" movement has always been more focused on vibes than policy—but if you had to boil it down to two basic economic ideas, it would be something like this: Higher tariffs to promote blue-collar work and stricter immigration enforcement to protect American workers from unfair competition in the labor market.
On both fronts, the latest jobs report (and those from the past few months) ought to raise some questions, particularly among those who have embraced Trump's agenda.
As a whole, the jobs report was not great—read Reason's Liz Wolfe for the big picture. When you look at the sectors of the economy that were supposed to benefit from Trump's economic policies, however, the news gets significantly worse. The manufacturing sector lost 12,000 jobs during the month of August and 78,000 over the past year, according to the data released Thursday by the Department of Labor.
Over the past three months, during which Trump's tariffs have been in full swing, the manufacturing sector is down 31,000 jobs. Other blue-collar sectors like construction and mining are down over that same period.
All three sectors figure to have been negatively affected by Trump's tariffs, which (contrary to the administration's claims) have hit American businesses with huge new taxes on parts, raw materials, equipment, and more. Like with any big tax increase, one way businesses can offset those costs is by hiring fewer people or postponing new investments and expansion. That's exactly what manufacturing firms say they have been doing.
In short: The tariffs are doing the exact opposite of what the Trump administration promised, but pretty much exactly what most economists warned would happen.
The data on labor force participation—which measures how many working-age adults are working or actively seeking work—tells a similarly unflattering story about MAGA economics.
Before getting into that, let's recall how Vice President J.D. Vance explained the connection between this stat and the administration's plans for aggressive immigration enforcement. In an interview with The New York Times last year, Vance said that jobs vacated by deported migrants would be filled instead by some of the 7 million able-bodied American men who are sitting on the sidelines.
Illegal immigration, Vance said, is "one of the biggest reasons why we have millions of people who've dropped out of the labor force. Why try to re-engage an American citizen in a good job if you can just import somebody from Central America who's going to work under the table for poverty wages? It is a disgrace, and it has led to the evisceration of the American middle class."
In the same interview, Vance argued that "you absolutely could re-engage folks into the American labor market," if competition from undocumented immigrants was reduced.
Six months into the Trump administration, that hasn't happened. Friday's jobs report shows that overall labor force participation has declined slightly, to 62.4 percent in August from 62.7 percent in July. Over the past year, the labor force participation rate is down 0.4 percent.
As economist Jeremy Horpedahl pointed out on Twitter, there's been no surge in employment for native-born Americans. The percentage of that population currently employed is 81.2 percent, up from 81.1 percent a year ago. (Overall, the employment population ratio in August was 59.6 percent, and it was unchanged since July.)
Big shifts in the economy can take time to materialize, of course. A sustained effort at booting immigrants from the country (and refusing legal entry to others) will certainly force some changes—and many unintended consequences. It seems far less likely that tariffs will bring about a manufacturing renaissance, but maybe those policies really are as magical as Trump and his allies seem to believe.
Right now, however, this much is clear: MAGAnomics has had a half-year trial run, and the results are quite unimpressive.
