Protectionism is Failing to Revive US Manufacturing

Despite a resurgence in protectionist policies in recent years, particularly under the Trump administration and continuing with the Biden administration, evidence suggests these measures have not delivered the promised revitalization of US manufacturing employment. Instead, economic modeling and recent analysis indicate that trade protectionism often leads to a decrease in domestic manufacturing jobs, alongside broader negative economic consequences.

The Counterintuitive Impact of Tariffs

The core argument for protectionism—that tariffs and other trade barriers will encourage domestic production and job growth—appears flawed in practice. A 2019 NBER working paper by Li, Wang, & Whalley demonstrates through a numerical global general equilibrium model that US trade protection measures actually reduce manufacturing employment. This is largely due to a combination of factors, including substitution effects between manufacturing and service sectors, and retaliatory measures from trade partners.

Similarly, research published in Economic Modelling in March 2021 confirms that US trade protection measures reduce manufacturing employment. The study highlights that increased consumption prices of manufactured goods, resulting from tariffs, shift demand towards services rather than bolstering domestic manufacturing.

Retaliation and Global Impact

A key factor exacerbating the negative effects of US protectionism is retaliation from other countries. When the US imposes tariffs, trading partners often respond with their own tariffs on US exports, further diminishing demand for US manufactured goods. The 2021 Economic Modelling study specifically notes that trade retaliation increases losses in US manufacturing employment. The overall effect, according to the research, is a net loss for US manufacturing demand and employment.

The impact isn’t limited to the US. The research indicates that trade wars negatively affect the whole world’s manufacturing employment.

The Persistence of Protectionist Policies

Despite the evidence against its effectiveness, protectionism has remained a prominent feature of US trade policy. As noted in a recent report by Scholars Strategy Network , the trend began with the Trump administration’s tariffs and renegotiation of NAFTA (now USMCA) and has largely continued under the Biden administration, particularly with tariffs on China. The promise of protectionist policies to deliver for US workers, as articulated during the 2024 campaign, continues to be a central tenet of some political platforms.

Broader Economic Trends and Supply Chain Disruptions

The rise of protectionism as well coincides with broader economic trends, including increasing globalization and automation. These trends have contributed to job losses in manufacturing, particularly middle-skill jobs, since the 1990s. Recent supply chain disruptions, further highlighted by Omdia , have also fueled calls for greater domestic production and protectionist measures, but these disruptions do not inherently justify policies that demonstrably harm manufacturing employment.

Key Takeaways

• US trade protectionism does not increase manufacturing employment; it reduces it.
• Retaliatory tariffs from trade partners worsen the negative impact on US manufacturing.
• Demand shifts from manufactured goods to services due to increased prices caused by tariffs.
• Protectionist policies have negative consequences for global manufacturing employment.