Trump’s tariffs were imposed, in part, to boost the US manufacturing sector – but that industry suffered a loss of jobs as well, according to at least one study.
Federal Reserve economists found a net decrease in manufacturing employment due to the tariffs in 2019. That’s mostly because goods became more expensive to US businesses and consumers, and retaliatory tariffs put on American-made goods made other US manufacturers less competitive when selling abroad.
Take this hypothetical example: Trump’s tariffs made foreign steel more expensive to US consumers – so much so, that some may switch to an American-supplier of steel. This is good for the US steel producer.
But now, US manufacturers that use steel to make their goods are likely paying a premium for it. This makes it more expensive for some American manufacturers to produce their own goods and hurts their bottom line.
“While one may view the negative welfare effects of tariffs found by other researchers to be an acceptable cost for a more robust manufacturing sector, our results suggest that the tariffs have not boosted manufacturing employment or output, even as they increased producer prices,” the Federal Reserve economists wrote.
What’s more, the jobs that were created came at a high cost. Each new job in the steel industry was expected to cost steel buyers an extra $650,000, according to an analysis from the
Peterson Institute for International Economics.
