Who in the labour market loses under tariffs?
By James Smith, Operations Director at Populus Select
It’s become a commonplace to hear that the consumer will lose out by paying higher prices for goods under new protectionism. It’s harder to ascertain what groups in the labour market might have problems now that tariffs have become part of the US administration’s international relations toolkit.
Stacked containers
Some of the industries set to be part of Trump’s self- declared ‘liberation day’ (2nd April) on which some tariffs might be imposed and those already imposed include: Cars, Steel, and Aluminium.
Further tariffs are proposed in May, with car parts being affected alongside those proposed on semiconductor chips, pharmaceuticals and other sectors and specific tariffs proposed against all goods from countries that buy oil from Venezuela.
At first glance, workers in the industries on which Donald Trump is set to impose tariffs seem at risk of encountering adverse impacts. However, a study of the impact of tariffs on the Indian labour market in 2019 when India lost its GSP (Generalised System of Preferences) status meaning that exports from certain industries to the US plummeted, showed a more complex picture.
- Counterintuitively, workers in affected sectors were less likely to be fired than some other sectors, furthermore, some experienced wage rises in the months following the loss of GSP status.
- The trade shock resulted in firms reassessing their employment needs. This involved prioritizing some occupations over others, namely support staff, contractors, technical workers, and managers winning out, and occupations like day labourers losing out (1).
What the effects of any tariffs imposed on the UK economy by the Trump administration will be is hard to predict. All we can say is that some degree of ‘churn’ is likely in both the labour market and in the decision-making and behaviour of companies with knock-on effects.
Institute of Development https://www.ids.ac.uk/opinions/trumps-tariffs-and-labour-market-effects/ 01/04/25 12:42