Manufacturing employment in the United States has fallen by 58,000 since April, when President Trump announced his tariffs on “liberation day” to stand at 12.7 million in September.
Five straight months of losses in an industry that tariffs were supposed to protect.
A week ago, at the economic forecast breakfast, we analyzed the impact of tariffs on manufacturing, as well as the agriculture and service sectors. Using data from 2012-2023 on all metro areas of Georgia, we find that tariffs do have a positive impact on manufacturing employment, but it takes about three years to see this result. It takes time for firms to adjust their employment and supply chains, and even longer to make facility adjustments.
We also find that there is a small positive effect of tariffs on the agriculture sector, but this sector is small in many MSAs. Conversely, we see a decline in jobs in the service sector three years after tariff rates increase. This loss of jobs almost exactly offsets the job gains seen in manufacturing and agriculture.
We find the biggest driver of manufacturing employment is a robust and thriving overall economy. Good policy, therefore, would concentrate on policies that benefit the whole economy, and if targeted at one sector over another, the trade-offs involved should be explicitly stated.
