Trade Protectionism and US Manufacturing Employment

Abstract This paper builds a numerical global general equilibrium model to simulate the effects of US-initiated trade protection measures on manufacturing employment. The simulation results show that US trade protection measures reduce manufacturing employment in the US, and these losses will further increase if trade partners take retaliation measures. Although trade protection measures can increase demand for US domestic manufactured goods because of decreased foreign demand, increased consumption prices of manufactured goods will move the demand to services. Trade partners’ retaliation measures will further decrease the demand for US manufactured goods. The whole effect is that the US loses on domestic manufacturing demand and then loses manufacturing employment.