New Jersey’s economy was already facing much uncertainty when President Trump made his tariff announcement. In February, Gov. Murphy proposed a record-high state budget including $1.2 billion in new fees and taxes – and increased spending. There is the looming threat of huge federal aid cuts that could upend the proposed budget and jeopardize vital services to residents. Massive budget deficits are projected for future state budgets. The cost of living for New Jersey businesses and residents is sky-high causing increased pressure. There is uncertainty regarding who our next governor will be – and the direction that person will take the state.
Now, the fallout from the tariff announcements has magnified whatever uncertainty we were already facing. It feels like the perfect storm for New Jersey.
Political, economic and media pundits are all over the place with some stating the tariffs could reshape the world trade order and benefit the U.S. economy. Others are fearful the president’s actions could lead to a deep recession and destabilize the economy. We simply don’t know.
What I do know is New Jersey businesses of all sizes need our support more than ever during this transition period, especially if the worst-case scenario plays out.
Gov. Murphy and the Legislature should approach our current situation as an economic emergency – and take immediate action where they have the most control: the state’s finances. Simply put, this is the worst possible time to increase state taxes and spending. Yet, Gov. Murphy’s proposed $58.1 billion state budget does exactly that.
The Legislature can take corrective action. There is still time to make necessary adjustments before the June 30 budget deadline – adjustments that could stabilize the state’s economy and create an environment where businesses feel secure enough to expand and maintain jobs in the Garden State, despite external pressures.
A Path Forward
To navigate through this economic storm, we propose the following actions:
- Prioritize Business Support: Replenish proposed budget cuts to fund agencies that directly support business growth, such as the New Jersey Economic Development Authority, the Business Action Center, and Small Business Development Centers.
- Avoid Harmful Tax Hikes: Eliminate proposed tax increases on gaming, cell phone bills, real estate, and cannabis purchases, as well as the new $2-per-truck fee on warehouse deliveries – all of which will have negative ripple effects on the economy.
- Increase allocations to higher education to support job training and workforce preparedness to ensure residents are adequately prepared for the changing world.
- Restore funding to the Main Street Recovery Fund, a critical resource for small businesses, which was cut by over 66%, leaving just $9 million – a paltry sum for a state of New Jersey’s size.
Like many before it, Gov. Murphy’s proposed budget (to be fair, drafted before the tariffs) fails to address New Jersey’s long-term structural deficits. Over the past eight years, state spending has surged by more than 65%, yet economic growth has failed to keep pace.
Instead of exacerbating the problem, we should reduce spending and strategically invest in initiatives that create jobs and generate organic revenue – ultimately making the state budget more sustainable.
The Economic Warning Signs
The urgency to act is clear. Consider these troubling indicators from just the past days:
- New Jersey businesses announced 3,618 layoffs in the first quarter of 2025 – more than double the 1,753 layoffs from the same period in 2024.
- In February 2025, New Jersey’s Corporation Business Tax collections year-to-date were down 5.4% compared to the same period in 2024, with collections totaling $2.25 billion, a decrease of $128.6 million.
- Federal Reserve Chair Jerome Powell warned that the tariffs could raise inflation and slow economic growth, indicating that the central bank will wait for a clearer picture before reducing interest rates.
- Economists and top Wall Street strategists are downgrading growth forecasts. JPMorgan Chase Chief Economist Bruce Kasman estimates that if the tariffs remain in place, the odds of a recession within the next year rise to 60%.
- Neil Bradley, chief policy officer at the U.S. Chamber of Commerce, told N.J. Chamber members that the announced tariffs will raise consumer prices, with some analysts estimating an average increase of $4,000 per family.
This is very concerning – and we need to prepare for the worst, yet hope for the best.
Our companies are searching for a sign of stability and confidence. The state should provide that leadership starting today by removing obstacles and making New Jersey a place business executives and owners are confident operating in. Let’s make New Jersey a port in the storm.
Time is of the essence to adopt policies that encourage investment, job creation, and economic stability – not policies that make New Jersey less affordable and less competitive. A strong economy, powered by a resilient business sector, is the only reliable path to long-term prosperity. If we take the right steps now, New Jersey has the best chance of weathering the economic storm. Absolutely nothing should have a higher priority for the administration and Legislature than the economy.
Tom Bracken is the president and CEO of the New Jersey Chamber of Commerce, headquartered in Trenton.
