During the 2016 campaign, Donald Trump warned that immigrants were costing jobs and protectionist trade policies would lead to more jobs in America. Eighteen months into his presidency, the evidence shows the opposite – new tariffs are costing jobs and economic research continues to demonstrate immigrants do not harm the job prospects of U.S. workers.
Economists at the Trade Partnership have found harmful employment impacts from the Trump administration’s decision to impose tariffs of 25% on steel imports and 10% on aluminum. The administration justified the tariffs under Section 232 of the Trade Expansion Act of 1962, as amended, claiming the imports from mostly U.S. allies “threaten to impair the national security” of the United States. The negative impact of the tariffs may surprise anyone who thinks a protectionist trade policy should mean more jobs for Americans.
The Trade Partnership analysis concluded:
- “The tariffs, quotas and retaliation would increase the annual level of U.S. steel employment and non-ferrous metals (primarily aluminum) employment by 26,280 jobs over the first one-three years, but reduce net employment by 432,747 jobs throughout the rest of the economy, for a total net loss of 400,445 jobs;
- “Sixteen jobs would be lost for every steel/aluminum job gained;
- “More than two thirds of the lost jobs would affect workers in production and low-skill jobs.
- “Every state will experience a net loss of jobs.”
One reason for this result is that nearly 40 times more people in America work in jobs that use steel and aluminum than in jobs connected to producing steel and aluminum. “American workers making steel/aluminum: 170,000. American workers consuming steel/aluminum: 6.5 million,” notes trade attorney Scott Lincicome.
Behind the numbers are stories of companies and workers affected by the tariffs and retaliation from other countries. “One week after the Commerce Department recommended heavy tariffs on steel and aluminum in February, Mr. Czachor [CEO of the American Keg Company] gathered 10 of his 30 workers in a conference room at work and broke the news that they were being laid off,” according to the Wall Street Journal. The Washington Post reported that at Stripmatic Products in Ohio because of higher steel prices due to the tariffs “the $1 million in new factory investment and the 10 new jobs it would have created have evaporated.”
The U.S. farm sector is also at risk due to retaliation for, among other things, a separate set of tariffs against Chinese imports. “Worries over a looming trade war have already hit Iowa pork producers’ pocketbook to the tune of $240 million from falling prices, and the damage will likely grow, industry leaders say,” reported the Des Moines Register. “The pork industry will have to downsize modestly,” according to Iowa State University economist Dermot Hayes.
Let’s contrast this turmoil created by a protectionist U.S. trade policy with positive news about the impact of immigrants on native employment. “The results of the state-level analysis indicate that immigration does not increase U.S. natives’ unemployment or reduce their labor force participation,” concluded a recent study for the National Foundation for American Policy by Madeline Zavodny, an economics professor at the University of North Florida (UNF) in Jacksonville. “Instead, having more immigrants reduces the unemployment rate and raises the labor force participation rate of U.S. natives within the same sex and education group.”
- “A 1 percentage point increase in the share of the labor force comprised of immigrants appears to reduce the unemployment rate of U.S. natives in the same sex-education group by 0.062 percentage points, on average.
- “A 1 percentage point increase in the share of the labor force comprised of immigrants appears to raise the labor force participation rate of U.S. natives in the same sex-education group by 0.045 percentage points, on average.
- “There is no evidence of significant adverse effects among less-educated U.S.-born workers, while immigration appears to boost labor force participation among more-educated U.S.-born workers.”
New research from Giovanni Peri, chair of the economics department at the University of California–Davis, supports Zavodny’s findings. At the request of This American Life, Peri examined the impact of new less-educated workers, primarily from Mexico, on natives “with low education and those working in the slaughtering sector” in the Marshall-DeKalb area of Alabama between 1980 and 2010.
More Info: www.forbes.com