JPMorgan Predicts 2026 Job Market Dip As Trump-Era Tariffs, Strict Immigration Policies Weigh On Hiring

The U.S. job market is expected to start 2026 sluggishly due to trade uncertainty, stricter immigration policies, and cautious corporate investment in AI, but JP Morgan Chase & Co. (NYSE:JPM) predicts a rebound later in the year. Trump Tariffs And Business Uncertainty Slow Hiring In Early 2026 In a forecast published earlier this month, economists at JPMorgan said 2025's slowdown in job growth stemmed largely from uncertainty over President Donald Trump's tariffs and trade policies. "Both long-term and short-term business planning has remained difficult, and layoff and hiring rates have been low," said Michael Feroli, JPMorgan's chief U.S. economist. Businesses are hesitant to expand their payrolls amid unclear trade rules and potential costs. Immigration Crackdown And AI Investment Limit Job Gains JPMorgan also highlighted the impact of Trump's aggressive immigration policies, which reduced the supply of workers. Combined with a flat labor participation rate, monthly job gains needed to keep unemployment steady could drop to just 15,000 from 50,000. Early-year unemployment is projected to peak at 4.5%. Meanwhile, AI spending on equipment, software, and data centers has not yet translated into significant job creation. See Also: Trump's AI Order Under Fire— Amy Klobuchar Says It's ‘Likely Illegal' While Bernie Sanders Calls It ‘Extremely Dangerous' AI Risks, Rising Unemployment Threaten 2026 Jobs In December, AI advanced rapidly 2025, and Geoffrey Hinton warned it could replace millions of jobs in 2026. He noted AI's capabilities were doubling roughly every seven months, allowing tasks that once took months to be completed in minutes and raised concerns about its potential to deceive and outpace safety measures. In the same month, economist Justin Wolfers cautioned that rising unemployment, not stock market swings, was signaling a potential U.S. recession. He linked the slowdown to tariffs implemented by the Trump administration, which stalled hiring and reduced job growth, highlighting "Liberation Day" as a key turning point for the labor market. Read Next: Trump Administration Locks In Zero Tariffs On UK Pharmaceuticals As NHS To Pay More For US Drugs Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: Shutterstock