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- President Donald Trump’s newly announced tariffs on steel and aluminum could result in a net decrease in the number of employed Americans, a new study found.
- The economists Joseph Francois and Laura Baughman said the tariffs would boost employment in metals industries by 33,464.
- But they would cost companies that rely on steel and aluminum about 179,334 jobs, the economists found.
The new tariffs on steel and aluminum proposed by President Donald Trump could end up being a net negative for American workers, a new study found.
The Trade Partnership, a consulting firm that researches international trade, found that the tariffs could cost the US about 146,000 jobs.
The report estimated that the proposed tariffs, which act as a tax on imports, would help boost the steel and aluminum industries. But it said increased costs for industries that make products using those metals would lead to overall job losses.
The economists Joseph Francois and Laura Baughman found that the new policy would increase employment in the US metals industry by 33,464 jobs. But they determined it would decrease employment in other industries by about 179,334 jobs.
To make the determinations, the report used the Global Trade Analysis Project database, the same database the Commerce Department used to make recommendations advocating the new tariffs.
The direct fallout would hit manufacturing companies that depend on steel and aluminum to make their products, the report said. Increased prices for the metals would cause cuts to other costs such as labor. In total, the economists expect a net decline of 2,612 manufacturing jobs.
Francois and Baughman said that outside the direct manufacturing hit, there would be serious repercussions for services industries that provide support to manufacturers. Workers in fields like communications and insurance could feel some of the downstream effects.
Additionally, some consumer industries would see declines in employment as household scale back their spending in response to higher prices.
“Consumers have reduced spending power when they are hit by higher costs (of a new car, a new washing machine, etc.) and, for many, lost wages from unemployment,” the study said. “As a result, households pull back on spending; services like education, entertainment and even healthcare are on the front lines of the spending reduction impacts, with additional attendant job losses.”
In other words, if steel and aluminum costs rise, so too will prices of items made with those materials. Consumers will then feel the squeeze and buy fewer items, dealing another blow to consumer-sensitive businesses and causing cutbacks.
The majority of these job losses, according to Francois and Baughman, would come from lower-paying industries.
“High-skilled jobs (managers, professionals, technicians and related workers) account for one-third of the net job losses,” the economists said. “Low-skilled workers (production workers, machine operators, office workers, administrative workers, sales/shops staff, and farm workers) bear the brunt of the tariffs, accounting for two-thirds of the total job losses.”