Global investment bank Goldman Sachs analyzed that the tariff policy of the Donald Trump administration could actually reduce jobs within the United States.
According to Shinyoung Securities on 14th, Goldman Sachs noted this in a recent report titled "Can tariffs increase employment in the U.S.?"
Goldman Sachs explained that past imposition of "targeted tariffs" had initially protected industries and increased jobs as demand shifted to domestic alternatives during industrialization. They cited the case of protectionist policies contributing to the expansion of lower-tier industries during South Korea's rapid industrialization. They also referenced how Harley-Davidson regained market share after requesting high tariffs on Japanese large motorcycles in 1983.
Goldman Sachs evaluated that the tariffs of the Trump administration are difficult to yield effects similar to targeted tariffs, as they are applied broadly rather than restricted to specific industries or items.
Goldman Sachs estimated this based on statistical data from academic research. Employment increased by an average of 0.4% when the tariff rate increased by 10 percentage points. However, the overall effect was limited, and there were many instances where the results were statistically insignificant. Conversely, when the expense of tariffs on imported intermediate goods increased by 1 percentage point, employment decreased by an average of 0.6%.
Goldman Sachs projected that under the assumption that the effective tariff rate would rise by more than 15 percentage points, the increase in manufacturing employment due to tariff protection would be less than 100,000 jobs. In contrast, they estimated that employment losses in lower-tier industries due to rising costs would be about 500,000.
Goldman Sachs said, "Most studies conclude that protectionist policies negatively impact overall employment," adding, "Considering the employment shocks caused by economic slowdown, the actual impact could be greater."