Trade Protectionism and US Manufacturing Employment
This paper uses a numerical global general equilibrium model to simulate the possible effects of US initiated trade protection measures on US manufacturing employment. The simulation results show that US trade protection measures do not increase but will instead reduce manufacturing employment, and US losses will further increase if trade partners take retaliatory measures. The mechanism is that although the substitution effects between domestic and foreign goods have positive impacts, the substitution effects between manufacturing and service sectors and the retaliatory effects both have negative influences, therefore the whole effect is that the US will lose manufacturing employment.
We are grateful to the SSHRC Internal Research Grant for financial support. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.