According to a recent report by Goldman Sachs, the imposition of widespread tariffs by President Donald Trump is predicted to result in increased unemployment rates.
Goldman Sachs acknowledges that the tariff strategy might result in the creation of 100,000 manufacturing jobs. However, this gain could be overshadowed by potential losses of up to 500,000 jobs in other sectors. These projections do not take into account the potential onset of a recession, which could further exacerbate unemployment.
Industries heavily reliant on imported components, such as those producing heavy machinery and semiconductors, are expected to feel the most impact from these tariffs.
The analysis draws from a collection of scholarly research on tariffs and their economic ramifications.
Tariffs function as a tax on imports, and these costs are borne by U.S. companies, typically leading to higher prices for American consumers. Despite this, Trump maintains that tariffs will generate revenue and bolster U.S. negotiating power internationally.
On April 2, Trump implemented extensive tariffs affecting 185 countries. Following market instability and a significant selloff of Treasury bonds, most tariffs were reduced to 10% shortly thereafter. Nonetheless, substantial tariffs continue to apply to Chinese imports, which constitute approximately 17% of U.S. imports.
An earlier Goldman Sachs analysis indicated that Trump’s extensive federal spending cuts could also hinder employment growth.
“Uncertainty about both tariffs and government spending cuts could depress job growth,” the report noted. “We estimate that trade policy uncertainty will exert a roughly 20k drag on monthly employment growth, that the direct effects of federal spending cuts will reduce federal government payroll growth by 25-30k jobs per month this year, and that uncertainty about federal payments will reduce hiring by about 35k in sectors that rely heavily on federal funding such as state and local government, healthcare, and education.”
Both reports highlight that the long-term effects of the tariffs remain uncertain, yet question whether Trump’s aims of revenue and job creation will be achieved.
A White House representative did not provide immediate commentary on the matter.
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