Trump tariffs, immigration policy drag down California economy
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- UCLA projects California jobless rate to rise to about 5.9% into 2026.
- Employment losses hit entertainment, big tech and durable goods sectors.
- Tariffs, deportations and fiscal gaps curb housing, agriculture and consumption.
California’s economic outlook continues to be sluggish, as UCLA forecasters predicted Wednesday the state’s unemployment rate will keep climbing as Trump administration tariff and immigration policies continue to have an impact.
“The employment recession we described three months ago has likely continued and is expected to continue through the early part of 2026,” wrote Jerry Nickelsburg, UCLA Anderson Forecast director emeritus.
The state’s 5.5% August jobless rate, the latest available, was the highest among the nation’s states and well above the national rate of 4.3%. The state rate has been above 5% for 19 months.
The forecast saw the rate climbing to 5.9% early next year before starting a gradual decline.
The higher rate is largely explained by lower employment in the entertainment industry, cutbacks in big tech, reductions in durable goods manufacturing jobs and other factors.
Durable goods are those expected to last for several years, such as cars or refrigerators.
There was some good news. Venture capital is pouring into California. In the first half of the year, about 70% of all such funding came to the state, and the forecast saw the trend continuing this fall.
A key to a rebound next year lies in the durable goods area, notably aerospace and technology-heavy sectors.
Immigration, tariff impact
The optimism is tempered by other factors, notably reductions in federal spending, tariffs, immigration policy and the deficits projected for the state and local governments.
Food processing and agriculture are being hit hard by deportations of undocumented immigrants, UCLA said.
“These will be disproportionately felt in the inland parts of the state and the agricultural coastal valleys,” it predicted.
And, UCLA said, “There is no sign from the Trump administration indicating that bringing back the undocumented agricultural workers is in the works.”
There are ripple effects when those workers are unavailable. Local consumption tends to drop, meaning fewer service jobs, and losing certain skilled workers could delay housing projects.
“Deportations will deplete the construction workforce,” the forecast said. It cited the loss of workers installing drywall, flooring, roofing and other items.
Tariffs imposed by the Trump administration also play a role in limiting housing production. The forecast said nearly 70% of all lumber imports come from Canada and roughly the same percentage of all gypsum imports, a major component of drywall, are from Mexico.
This story was originally published December 3, 2025 at 1:00 AM.
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