HONOLULU (KHON2) — The latest actions by the Trump Administration could negatively impact Hawaii’s economic growth, according to UHERO’s first quarter forecast for 2025.

UHERO forecasts tariffs, mass deportations, and spending cuts could result in the loss of more than 2,000 local jobs, placing Hawaii’s economy at risk of recession.

The administration’s temporary halt to all contracting, which the courts have stalled for now, would be damaging to the University of Hawaii and many charitable agencies.

Officials added that cuts to federal programs and grants could also impact state funding.

“The risks are real. Everybody’s going to be in adjustment mode just because of the uncertainty. So you could have non-profits and contractors putting hiring freezes in place right now because they don’t know what their budget situation is going to be,” said Carl Bonham, UHERO Executive Director.

UHERO experts said federal tax cuts could benefit the U.S. in 2025 but a weakening economy could raise prices and force a modest pullback in 2026 to 2027.

“The Japanese market recovery will advance only very slowly. The recovery of international markets will continue, although there is a risk that deteriorating global relations could hurt.”

Overall economic growth in Hawaiʻi will feel the adverse effects of federal policies over the next several years, pulling job growth to zero and real GDP growth down to 1.6% this year. More extensive federal layoffs, tariffs or deportations could well result in a Hawaiʻi recession and undermine long-term growth prospects.

UHERO Report

The one bright spot is strong construction activity from public and private sector projects, including Maui’s rebuild.

It will result in a peak of nearly 41,000 construction workers in 2026, but tariffs on materials and potential labor shortages remain a concern.