President Donald Trump
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  • US President Donald Trump's newly announced tariffs on steel and aluminium could result in a net decrease in the number of employed Americans, according to a new study. 
  • Economists Joseph Francois and Laura Baughman said the tariffs would boost employment in metals industries by 33,464.
  • But they would cost downstream companies that rely on steel and aluminum about 179,334 jobs.


The new tariffs on steel and aluminium proposed by US President Donald Trump could end up being a net negative for American workers, according to a new study.

The Trade Partnership, a consulting firm that does research on international trade, found that the tariffs could cost the US around 146,000 jobs.

The report estimated that the new tariffs, which act as a tax on imports, would help boost the steel and aluminum industries. But it said increased costs for industries that use those metals as an input would lead to overall job losses.

Economists Joseph Francois and Laura Baughman found that the new policy would increase employment in the US metals industry by 33,464 jobs. But it would decrease employment in other industries by about 179,334 jobs.

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The report used the Global Trade Analysis Project (GTAP) database to make the determinations, the same database the Commerce Department used to make recommendations advocating for the new tariffs.

The direct fallout would hit manufacturing companies dependent on steel and aluminum as inputs for 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 of 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.

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