Commerce Secretary Howard Lutnick on Wednesday denied that the Trump administration’s tariff policies were to blame after a new report showed civilian payrolls unexpectedly fell in November.
Instead, Lutnick argued on CNBC’s “Squawk on the Street” that the government shutdown has temporarily slowed small business activity. He added that federal efforts to enact mass deportations of illegal immigrants are also suppressing job numbers.
Asked if President Donald Trump’s import tariffs explain Wednesday morning’s ADP report that revealed an unexpected 32,000-person drop in the labor market, Lutnick said, “No, no, it’s not tariffs.”
This decline was sharp from October, led by companies with fewer than 50 employees, which saw their number of employees fall by 120,000. Meanwhile, large companies reported a net increase in employees by 90,000.
“Remember, under the Democratic administration, there were business closures, right? So what do you think that’s going to do to small businesses? People who do business with the U.S. government know they’re not getting paid, so in a sense they’re delaying projects,” Lutnick said.
“That means we’ve seen a little bit of a downturn in construction small businesses. So the Democratic shutdown hurt the numbers,” he said.
“And don’t forget that deporting people suppresses the number of small and medium-sized private sector jobs,” Lutnick added.
But the Cabinet Secretary assured that these numbers would “rebalance and rise again”, insisting that “this is just a short-term event” and that “next year’s numbers will be excellent.”
He also reiterated previous predictions that U.S. gross domestic product (GDP) would rise above 4% in 2026.
Mr. Lutnick’s defense of President Trump’s protectionist policies comes as business executives and economic forecasters have begun to warn that the president’s increasingly aggressive and unpredictable tariffs could spur domestic job cuts next year.
“Employment has been volatile of late as employers navigate a cautious consumer and uncertain macroeconomic environment,” ADP chief economist Nella Richardson said in a press release accompanying the private payroll report.
“November’s economic slowdown was widespread, but led by the slowdown in small businesses,” Richardson said.
