Broad-Based Tariffs Harm Employment, Contrary to Trump Administration's Claims

Strategic Insights -

A new analysis by Goldman Sachs found that broad-based tariffs will have a net negative effect on employment, contradicting the Trump administration's claims that they will bring back jobs. The study estimates that an increase of 10 percentage points in broad-based tariffs will boost manufacturing employment by 100,000 jobs but drag down employment overall by five times as much, roughly 500,000 jobs. The analysis highlights the economic reality that broad-based tariffs are unlikely to achieve the Trump administration's goals of creating jobs.

Key Takeaways:

  • Goldman Sachs estimates that broad-based tariffs will have a net negative effect on employment, with a 10 percentage point increase boosting manufacturing employment by 100,000 jobs but dragging down employment overall by 500,000 jobs.
  • The analysis takes into account research on how tariffs affect protected industries, as well as research on how they affect "downstream" companies that aren't protected, such as domestic manufacturers that rely on imported parts or raw materials.
  • The estimate does not take into account the possibility of a recession, which would also be a hit to employment.
  • The Trump tariffs are broad-based, with 10% tariffs across all countries, plus levies of more than 100% on China, which is unprecedented in both breadth and magnitude.
  • The National Association of Manufacturers has stated that the high costs of new tariffs threaten investment, jobs, supply chains, and America's ability to outcompete other nations.
  • Tariffs can work to grow domestic manufacturing in three ways: infant industries that need protections from imports, goods with "demand elasticity" that redirect buyers to stuff that is already made in the U.S., and finished products.
  • Even if the U.S. starts making more things domestically, the rise in employment will likely be muted thanks to the latest technological advances in the manufacturing sector.

Statistics:

  • Goldman Estimates: A 10 percentage point increase in broad-based tariffs will boost manufacturing employment by 100,000 jobs and drag down employment overall by 500,000 jobs.
  • Trump Tariffs: 10% tariffs across all countries, plus levies of more than 100% on China.
  • National Association of Manufacturers statement: The high costs of new tariffs threaten investment, jobs, supply chains, and America's ability to outcompete other nations.
  • Tariffs on imported light trucks in place since 1964: Helped boost jobs in the U.S. auto industry.
  • Harley-Davidson tariff: A 45% tariff pushed by the company during the Reagan administration helped boost its market share.

Sources:

  • "https://www.wsj.com/economy/trade/trump-tariffs-us-global-manufacturing-294b0f55"
  • "https://shrimpalliance.com/u-s-shrimp-industry-hails-new-tariffs-as-crucial-lifeline/"
  • "https://uaw-newsroom.prgloo.com/press-release/in-a-victory-for-autoworkers-auto-tariffs-mark-the-beginning-of-the-end-of-nafta-and-the-free-trade-disaster"
  • "https://www.aei.org/carpe-diem/the-anti-consumer-25-chicken-tax-on-imported-trucks-has-insulated-the-big-3-from-foreign-competition-for-50-years/"
  • "https://www.axios.com/2025/04/02/trump-tariffs-jobs-manufacturers"