The tariff stick and the winter of immigration reshape the American workforce; weak non-farm payrolls may become the norm in the "Trump 2.0 era."

There is no doubt that Trump, returning to the White House, is furious about the latest data showing extremely weak non-farm employment growth over the past three months, to the point where he questions the integrity of the data and directly fires the head of the U.S. Bureau of Labor Statistics (BLS). However, investors need to buckle up for the "Trump 2.0 era" if he is re-elected as President of the United States, as weak non-farm statistics may become the new normal—primarily due to Trump's own immigration policies and the increasingly low level of public trust in the federal government.

In May, U.S. employers added only 73,000 non-farm jobs, with an average employment growth of just 35,000 over the past three months. In contrast, during the entire year of 2024 under the Biden administration, employers added an average of 168,000 jobs per month.

Some economists believe that Wall Street's top traders are filled with skepticism and dissatisfaction regarding Trump's government shouting "data is manipulated" and the series of actions leading to the firing of the head of the BLS. These moves by the Trump administration could severely undermine confidence in the financial markets. The unprecedented trend of "no longer caring about the initial non-farm figures, but waiting for the revised non-farm figures to judge the market trading situation" may become an important theme affecting stock, bond, and currency trading in the near future.

The non-farm employment data released last week indicates a significant cooling of the U.S. labor market in recent months. According to the U.S. Bureau of Labor Statistics, in July, businesses added only 73,000 jobs, far below economists' expectations of around 110,000; meanwhile, the initial non-farm employment figures for the previous two months were unexpectedly revised down by nearly 260,000, a downward revision of an unprecedented 90%. The latest unemployment rate rose from 4.1% in June to 4.2%.

Is the data really manipulated?

According to the employment report released on August 1, the BLS revised down the non-farm employment figures for May and June by nearly 260,000. This is the largest downward revision for a two-month total since the peak of the COVID-19 pandemic in 2020, fundamentally changing perceptions of the trajectory of the U.S. labor market and the path to a "soft landing" for the U.S. economy.

Trump falsely claims that the latest data is "manipulated" and fired the head of the statistical agency responsible for the employment report. However, for economists, these employment figures make complete sense. By expelling immigrants and imposing new restrictions on various long-standing immigration policies, Trump is shrinking the size of the labor market, thereby slowing down the U.S. economy.

"Slowing immigration will exert significant downward pressure on U.S. labor and employment growth," researchers at the American Enterprise Institute (AEI) wrote in a recent report. The study found that employment growth could slow to only 10,000 to 40,000 new jobs per month later this year. The agency predicts that until 2027, the impact of Trump's immigration restrictions could lead to negative employment growth, with the U.S. economy potentially losing jobs every month The growth rate of the U.S. population has slowed for 25 years, primarily due to relatively low birth rates and stagnant immigration growth. However, there is a notable exception: in the last three years of the Biden administration, both the U.S. population and labor force have grown unusually. This is because Biden has adopted extremely lenient policies on immigration.

Due to the heavy burden of immigration in some regions, Biden tightened some forms of immigration last year. Trump went further, issuing fewer green cards and temporary visas, accepting fewer refugees, and deporting thousands of foreigners. AEI researchers estimate that net migration—i.e., the number of people entering minus those leaving—will drop from about 2.6 million in 2024 to zero in 2025, and may even turn negative, meaning more people will leave than enter. This has significant implications for an already slowing U.S. economy.

Some investors may believe that a decrease in immigration means that national wealth will be distributed among fewer people, thus leaving more for those who remain. However, this is not the case. Most immigrants tend to choose relatively tough blue-collar jobs, and more people choosing blue-collar work means larger-scale economic growth, more output, and more jobs. Fewer workers have the opposite effect. Therefore, when the scale of immigration significantly decreases, the wealth available for distribution also decreases.

Why are the non-farm data during the Biden administration so impressive?

Although there is a significant legal distinction between legal and illegal immigrants in the U.S., from an economic perspective, this distinction is not as important. Regardless of legal status, workers contribute to U.S. economic growth.

The surge in immigration during Biden's term has become a significant political burden, providing a key breakthrough for Trump in the 2024 presidential campaign. However, the surge in immigration has also contributed to record job growth during Biden's tenure. During Biden's four years in office, the economy added 16.1 million jobs, meaning that under Biden's administration, the U.S. astonishingly added an average of 336,000 jobs per month. By early 2024, economists largely attribute the extraordinary job growth during Biden's term to the surge in immigration.

This trend now seems to be reversing. Jed Kolko, an economist at the Peterson Institute for International Economics, believes that the U.S. population growth rate has dropped from 1% in 2023 to 0.5% in 2025, a significant change in a short time. Almost all of this change is related to immigration fluctuations. "Policymakers need to lower their targets and forecasts for key economic data," he wrote in a recent analysis.

Goldman Sachs recently stated that the sharp decline in immigration is a core factor in the institution's downward revision of its monthly non-farm employment expectations for the remainder of 2025 to just 30,000 or fewer. The institution's economists pointed out that the decline in the labor force means that even if hiring nearly stagnates, the unemployment rate may still remain at deceptively low levels. Given that Trump talks incessantly about tariffs every week and announces new import taxes or foreign trade agreements, most of the focus in Trump's economy is on new tariffs related to imported goods. However, the immigration policies he leads will undoubtedly have a greater impact on the U.S. economy.

"We believe that so far, the biggest impact on the U.S. economy in 2025 is the gradual closure of the border, which has caused U.S. population growth and potential GDP to decline by about 1%." "Michael Drury, chief economist at McVean Trading, wrote in a client communication on August 15. 'While the keyword tariffs are talked about more, their impact on nominal economic growth will be very mild compared to immigration.'"

If during Trump's presidency, the highlight indicator of job growth during Biden's term shrinks to just 30,000, 20,000, or even lower per month, what would Trump do? First, he would likely look for a scapegoat, which is precisely the role he has set for Federal Reserve Chairman Jerome Powell. Trump blames all the economic phenomena he dislikes on Powell, including interest rates—Trump wants interest rates to be lowered by three percentage points. Trump would certainly list weak employment data as another of Powell's so-called "sins."

Will Trump "manipulate" the data?

The U.S. government under Trump might also attempt to manipulate statistical data—not by directly altering the data but by modifying some methodologies for formulating or compiling the data to make them look better. Trump nominated a right-wing figure who has been condemned by many mainstream economists to oversee employment and inflation reports, suggesting that Trump's supporters might revise the data formulation patterns to make Trump look better. If the real data is indeed distorted, the market would immediately sense this and respond by selling off stocks and bonds. Trump usually does not care about the opposition from traditional establishment figures, but he does care about the reactions and sentiments of the U.S. stock and bond markets.

"Trump probably won't artificially create data, nor will he change his immigration policies, even though these immigration restrictions will undoubtedly stifle employment," noted Jim Bianco, an economist at Bianco Research.

According to recent polls, Trump is the only major issue that has gained net support from American blue-collar voters regarding illegal immigration. "Even if Republicans or Trump accept the view that job growth is slowing, they will not overturn the decision to close the borders," Bianco wrote in a report on August 12. "It is precisely for this reason that they have won votes from a large number of workers, and changing this would be a political disaster."

If Trump selects a new director, will the BLS statistical model change?

Economists believe that changes are possible. The dismissal of McKenna has completely opened the door for Trump to nominate a new head of the Bureau of Labor Statistics (BLS)—the only politically appointed position within that labor agency. Although the director is responsible for overseeing any statistical data released by the agency, they typically do not directly participate in the production process of the numbers. However, they can influence the way the data is specifically presented.

Some economists are concerned that Trump's decision to fire McKenna could undermine the statistical credibility of U.S. federal government data, which has been incredibly strong for decades, and could potentially dismantle the market trust that the agency has built over decades.

The BLS's monthly labor market statistical report consists of two important surveys: one targeting businesses and the other targeting residences and households. Employment and wage data come from a persistent survey of approximately 121,000 employers, covering over 630,000 workplaces across the country The agency typically conducts investigations of businesses over a three-month period—gaining a more complete picture as more companies respond—meaning that the corresponding numbers in the previous non-farm payroll report will be updated. This, in turn, means that any given month's employment report contains both the current month's data and significant revisions to the data from the previous two months.

Therefore, when fewer companies respond, estimating employment growth becomes more difficult. In recent years, the initial response rate has repeatedly fallen below the average level of business responses prior to the COVID-19 pandemic. More broadly, as the public has been "flooded" with various surveys and trust in the federal government and other agencies has declined, response rates have significantly dropped for a long time. At the same time, U.S. statistical agencies have been struggling to cope with tighter budget cuts and the heavy workload brought about by restrictions on the number of statistical staff, against the backdrop of significant reductions in federal budgets and federal payroll costs during the Trump administration