A policy brief issued today by The Trade Partnership reported that Section 232 tariffs on steel and aluminum imports would result in the loss of nearly 180,000 jobs in the US.
Although Secretary of Commerce Wilbur Ross and advisor Peter Navarro have argued that the proposed 25 percent tariff on steel and 10 percent tariff on aluminum will have no significant negative impact on US consumers, negative outcomes would outweigh positive benefits exclusively aimed at US steel and aluminum producers.
The policy brief, which does not take into account any potential retaliation against US exports, only of the tariffs themselves, found that more than five jobs would be lost for every job gained.
Job losses in other manufacturing sectors (-36,076) would cancel out the job gains in the steel and aluminum producing sectors, with particularly large hits to workers in the fabricated metals sector (-12,800), motor vehicles and parts (-5,052), and other transportation equipment (-2,180).
The brief also said services sectors will be hit the hardest for several reasons. First, as the largest component of the US economy, services are key inputs into the output of every US sector, so as manufacturing, agriculture and energy output decline, so too do services output and related jobs. Second, 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. 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.
The brief was able to disaggregate the employment effects by skill level. High-skilled jobs (managers, professionals, technicians and related workers) account for one-third of the net job losses. 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.
In conclusion, The Trade Partnership believes steel and aluminum tariffs would reverberate throughout the US economy in ways that will, on balance, reduce US employment. While US steel and aluminum jobs would increase, those gains would come at a high cost: over 179,300 job losses across the rest of the economy.