WASHINGTON, DC —A new report released by the Federal Reserve is linking the tariff increases starting in 2018 to manufacturing industry job losses.
The report studied three areas affected by the new tariffs, including the cost to consumers domestically, the declines in competitiveness, and the “industry-level exports subject to new retaliatory tariffs.”
The authors of the study, economists Aaron Flaaen and Justin Pierce, found that the industries that saw the biggest effects of China’s retaliatory tariffs were magnetic and optical media, leather goods, aluminum sheet and foil, iron and steel mills, audio and video equipment, pesticides and agricultural chemicals, and computer equipment.
“We find that U.S. manufacturing industries more exposed to tariff increases experience relative reductions in employment as a positive effect from import protection is offset by larger negative effects from rising input costs and retaliatory tariffs. Higher tariffs are also associated with relative increases in producer prices via rising input costs,” Flaaen and Pierce concluded.
The authors also measured the reduction in workforce finding that, “For manufacturing employment, a small boost from the import protection effect of tariffs is more than offset by larger drags from the effects of rising input costs and retaliatory tariffs.”