Recently, a study published in VoxEU by the European Centre for Economic Policy Research (CEPR) found that the "reciprocal" tariffs implemented by the United States have almost no positive impact on manufacturing employment. This conclusion has significant warning implications for the current trade policy in the United States that emphasizes the revival of the manufacturing industry.
The report titled 'The (non) effect of tariffs on manufacturing employment' systematically reviews changes in trade policies and employment data, pointing out that although tariffs may have a short-term boost to certain protected industries, this boost is often difficult to sustain due to other economic factors. Specifically, let's take a look:
Retaliatory tariffs from other countries weaken US export demand;
The increase in import costs has raised the input costs for manufacturing enterprises;
The rise in consumer prices has led to a weakening of internal demand;
The report concludes that in the long run, the decline in manufacturing employment in the United States is not attributed to trade competition, but rather to productivity gains, automation development, and economic structural transformation. Even in industries with high import ratios to countries such as China, the impact of trade on employment is very limited.
This report is released at a time when US policy makers are debating protectionism and industrial strategy. Some people believe that domestic manufacturing should be protected through tariffs, but CEPR's research results show that tariffs are not an effective tool to reverse the deterioration of employment. The report believes that tariffs as a policy option have political appeal because they are visible in the short term and operate intuitively. However, from the perspective of economic effectiveness, its immediate benefits will be offset by broader economic fluctuations.
In fact, under the limited impact of tariffs on employment, the long-term downward trend in the employment structure of the US manufacturing industry is truly visible. According to relevant data, although the manufacturing output value has recovered to a historical high, the number of employed people has not increased synchronously, but has structurally decreased. This reflects the 'unconscious recovery of employment': the increase in output has not driven the corresponding return of labor positions.
In addition, automation and machine substitution for human labor have become irreversible trends. As economists have pointed out, the cost increase brought about by tariffs has actually prompted companies to accelerate the adoption of robots and AI technology to reduce their dependence on manual labor. This means that protectionism may actually accelerate technological substitution rather than reviving labor-intensive manufacturing.
From a broader perspective, the United States, like other developed economies, has experienced industrialization, automation, and entered a development stage dominated by the service industry on the path of manufacturing decline. This is an inevitable result of the evolution of economic development, rather than something that can be reversed by short-term tariff policies.
In summary, CEPR's research reminds policy makers that if the goal is to reshape manufacturing employment, relying solely on trade protection and tariffs is not feasible. The truly effective path should focus on structural reforms such as technological innovation, industrial upgrading, improvement of labor skills, and supply chain restructuring. If the United States wants to revive its manufacturing industry, it must increase support for technology investment, worker retraining, and high value-added manufacturing in policy tools.
The report concludes that in the long run, the decline in manufacturing employment in the United States is not attributed to trade competition, but rather to productivity gains, automation development, and economic structural transformation. Even in industries with high import ratios to countries such as China, the impact of trade on employment is very limited.
This report is released at a time when US policy makers are debating protectionism and industrial strategy. Some people believe that domestic manufacturing should be protected through tariffs, but CEPR's research results show that tariffs are not an effective tool to reverse the deterioration of employment. The report believes that tariffs as a policy option have political appeal because they are visible in the short term and operate intuitively. However, from the perspective of economic effectiveness, its immediate benefits will be offset by broader economic fluctuations.
In fact, under the limited impact of tariffs on employment, the long-term downward trend in the employment structure of the US manufacturing industry is truly visible. According to relevant data, although the manufacturing output value has recovered to a historical high, the number of employed people has not increased synchronously, but has structurally decreased. This reflects the 'unconscious recovery of employment': the increase in output has not driven the corresponding return of labor positions.
In addition, automation and machine substitution for human labor have become irreversible trends. As economists have pointed out, the cost increase brought about by tariffs has actually prompted companies to accelerate the adoption of robots and AI technology to reduce their dependence on manual labor. This means that protectionism may actually accelerate technological substitution rather than reviving labor-intensive manufacturing.
From a broader perspective, the United States, like other developed economies, has experienced industrialization, automation, and entered a development stage dominated by the service industry on the path of manufacturing decline. This is an inevitable result of the evolution of economic development, rather than something that can be reversed by short-term tariff policies.
In summary, CEPR's research reminds policy makers that if the goal is to reshape manufacturing employment, relying solely on trade protection and tariffs is not feasible. The truly effective path should focus on structural reforms such as technological innovation, industrial upgrading, improvement of labor skills, and supply chain restructuring. If the United States wants to revive its manufacturing industry, it must increase support for technology investment, worker retraining, and high value-added manufacturing in policy tools.
