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Trade Protectionism and US Manufacturing Employment

Trade Protectionism and US Manufacturing Employment

410/2019 Chunding Li, Jing Wang and John Whalley
working papers,political economy

410/2019 Chunding Li, Jing Wang and John Whalley

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.

Political Economy