The Impact of Tariffs on Workforce Planning

The tariffs introduced by the U.S. government are prompting many organizations to rethink their workforce strategies as they navigate increased operational costs, supply chain disruptions, and heightened risk. One Oxford Economics study based on the first term tariffs suggested there would be no substantial positive effects on overall employment, but that there would be a negative impact on jobs in industries reliant on imported materials.

In response to these changes, many companies are adjusting hiring plans and focusing on enhancing workforce flexibility while being more cautious in talent investment.

To better understand how businesses are being impacted by tariffs, Magnit conducted a survey with its customers for some deeper and more detailed insights. This blog post is going to dive into those core findings, including the “wait and see” mode of organizations, different barriers to hiring, and the increased reliance on the contingent workforce to overcome related challenges.

Organizations are in a “Wait and See” Mode

Although the results vary among companies, almost every organization is deferring workforce-related decisions until there is more clarity with current and upcoming tariffs. This uncertainty has been compounded by a recent federal appeals court decision that temporarily reinstated tariffs previously ruled unconstitutional by a lower court. While the case is likely to advance to the Supreme Court, it could influence trade policy and global economic and workforce dynamics, further contributing to the current sense of unpredictability. The survey shows that amongst organizations, concrete headcount moves are made only once cost impacts are clearly quantified. Additionally, few cuts are in motion immediately, but many have upcoming changes to their contingent workforce; the survey results demonstrate 19% are seeing direct impact to their non-fulltime talent.

Hiring is Facing Additional Barriers

Various challenges are surrounding hiring as well. The survey results reveal that 12% of organizations are showing changed behavior in open requisitions and fills. For example, there are headcount controls in place as well as hiring freezes for full-time employees. In addition, there are enhanced approval processes and gates for new hires due to tariff concerns. Leadership is also explicitly re-evaluating full-time versus contingent strategies, and even contingent requisitions are facing enhanced budget approval before proceeding in the hiring process.

Budgets Are Under Scrutiny

Consequently, budgets are being carefully looked over across the board as a direct result of the tariff implications. According to the survey results, companies are pulling in granular data to model the impact of costs before committing to making any hires. They are also seeing project delays as a result and reducing hours. It’s also worth noting that any investment and risk strategy is being shaped by market volatility, including ongoing interest rate moves and reactions to share prices.

Contingent Talent Remains a Flexible Solution

Forward-thinking organizations have already been relying on contingent workers to remain nimble, and navigating these tariffs reveals a similar approach. Our survey demonstrates that where full-time hires are being blocked, decision-makers are discussing an uptick in contingent usage as a workaround when full-time hiring stalls. That being said, the survey shows 22% of organizations reported impacts on both contingent and full-time employees.

Key Takeaways

Although some companies are seeing an impact on their contingent and full-time workforces, most organizations are waiting to see what comes next. Management should view tariffs less as a one-off shock and more as an ongoing driver of tighter spend controls, supply chain reshuffles, and market-driven risk management. It’s recommended to keep close tabs on the latest in tariffs via task forces, hedge through geographic diversification, defer non-critical budgets, and only enact workforce changes once concrete cost data emerges—while remaining ready to pivot if another round of tariffs comes.

Interested in learning how to remain competitive in an uncertain socioeconomic landscape and overcome contingent workforce challenges via the power of data? Download our white paper.  

Disclaimer: The content in this blog post is for informational purposes only and cannot be construed as specific legal advice or as a substitute for legal advice. The blog post reflects the opinion of Magnit and is not to be construed as legal solutions and positions. Contact an attorney for specific advice and guidance for specific issues or questions.