The American labor market is showing unmistakable signs of strain as the number of people receiving unemployment benefits climbs to its highest level since the height of the COVID-19 pandemic. According to data released by the US Department of Labor on August 7, 2025, the count of workers filing 'continued claims' for jobless assistance surged to 1.97 million at the end of July. That’s a notable leap from the 1.85 million recorded at the start of January this year, and it’s raising eyebrows among economists and policymakers alike.
While new claims for unemployment insurance ticked up only modestly—by 7,000 compared to the previous week—the overall trend points to a labor market that’s losing its footing. As The Washington Post reported, these numbers reinforce a growing sense that the once-resilient US job market is entering a more precarious phase. There’s no avalanche of layoffs just yet, but for many out-of-work Americans, finding a new job is taking longer than before, and the prospect of a swift return to work is dimming.
Recent employment reports paint a sobering picture. On August 1, 2025, a new labor market analysis revealed that hiring in July fell short of expectations, with job growth lagging and previously reported gains for May and June revised sharply downward—by more than 258,000 jobs. The unemployment rate edged up to 4.2% in July, still relatively low by historical standards, but the upward trend is hard to ignore.
Daniel Zhao, chief economist at Glassdoor, cautioned against underestimating the impact of this slowdown. "That means it’s harder for unemployed workers to re-enter the labor force, and they may have to accept worse jobs, or those currently employed can’t advance in their careers," Zhao explained, as cited by The Washington Post. His warning underscores the ripple effects of a sluggish labor market, where the consequences extend far beyond headline unemployment rates.
Several forces are converging to create this challenging environment. Among them, recent tax and trade policy changes are front and center. The Trump administration’s new tariffs, which officially took effect on August 7, 2025, are adding fresh uncertainty. The tariffs impact dozens of countries, with rates ranging from 10% to 41% for most US trading partners. Vietnam, for instance, saw its tariff rate adjusted to 20%—down from the 46% announced earlier in April, but still a significant hurdle for exporters. These measures, intended to protect American industries, are also driving up import costs, putting additional pressure on both consumers and businesses.
The Vietnamese Ministry of Industry and Trade responded swiftly, submitting adaptation plans to the country’s Prime Minister and launching technical negotiations to shore up trade agreements. The Ministry of Finance is working alongside other agencies to assess the impact and propose targeted policies. Vietnamese exporters, particularly those in the rice and seafood sectors, are feeling the heat. According to the Vietnam Association of Seafood Exporters and Producers (VASEP), the 20% tariff, coupled with potential hikes from ongoing trade disputes, is complicating pricing strategies for Vietnamese shrimp in the US market. Yet, VASEP maintains a hopeful outlook: if Vietnamese firms focus on differentiated products, high quality, and sustainable practices, they can remain strategic suppliers in the US despite the headwinds.
Meanwhile, a recent 2025 business confidence report, jointly conducted by the Private Economic Development Research Board (IV Board) and VnExpress, shows Vietnamese enterprises are not sitting idly by. About 29.7% are actively seeking new markets to reduce reliance on the US, 20.5% are ramping up domestic production localization, and 19.6% are looking for alternative input sources from other trading partners. Roughly a quarter—24.2%—have chosen to temporarily suspend operations, adopting a wait-and-see approach amid the policy flux. Interestingly, only about 6% of surveyed businesses are considering raising prices for US-bound products, indicating that price hikes are not seen as a viable solution for most.
The US labor market’s malaise isn’t solely the result of international trade tensions. Domestic policy changes are also playing a role. Federal layoffs have accelerated and are expected to continue rising this year, a trend that could spill over into other sectors. A Supreme Court ruling in July gave the Trump administration the green light to proceed with further job cuts, adding to the labor market’s woes. As reported by TTXVN, these developments are compounding an already uncertain business environment, making it difficult for companies to commit to hiring or expansion plans.
Despite these challenges, some businesses are managing to adapt. Vietnamese rice exporters, for example, report that shipments to the US are proceeding as usual. Deep-processed fragrant rice varieties, which competitors like Thailand do not offer, continue to find stable demand among American importers. This suggests that innovation and product differentiation can provide a buffer against the worst effects of protectionist policies.
Still, the overall mood among labor market experts is cautious. Many believe that companies, having endured fierce competition and labor shortages in the aftermath of COVID-19, are reluctant to lay off workers unless absolutely necessary. But if economic conditions deteriorate further, a large wave of layoffs could be on the horizon. The evidence is mounting: slower hiring, longer spells of unemployment, and a growing number of people relying on government assistance.
It’s a complex picture, with no easy answers. On one hand, American policymakers argue that tougher trade policies are needed to protect domestic industries and jobs. On the other, the fallout from higher tariffs and stricter immigration controls may be making it harder for businesses to grow and for workers to find stable employment. The debate is far from settled, and the coming months will test the resilience of both the US and its trading partners.
For now, the data speaks for itself. The US job market is facing its most significant test since the pandemic, and the effects are rippling across borders. Whether through innovation, diversification, or sheer perseverance, businesses and workers alike are searching for ways to weather the storm. The next chapter will depend on how policymakers—and the global economy—respond to these mounting challenges.
