Bottom Line:
Trump's tariffs may create a few winners but will likely make America lose overall.
Implications for Tariffs:
While tariffs might restore some manufacturing positions (though who wants minimum wage jobs making socks and cheap furniture?), they'll raise prices and destroy service jobs that global trade created.
The Big Picture:
The China shock was a net job creator that redistributed employment from the industrial heartland to coastal and urban areas, contributing to America's changing job geography.
Key Finding 3:
In places with a highly educated workforce (e.g., West Coast, major cities), service job growth exceeded mfg job losses. In places with lower education levels and high mfg dependence (e.g., Midwest, South), mfg job losses were only minimally compensated by service job gains.
Key Finding 2:
This job reallocation primarily occurred within larger firms, with industry switching of plants from manufacturing to services accounting for 40% of the total negative effect on manufacturing.
Key Finding 1:
The China shock led to manufacturing job losses but created offsetting gains in service sector jobs. Companies shifted from manufacturing products to designing, engineering, marketing, and selling them (think "Designed by Apple in California. Assembled in China").
Why This Matters for Today's Tariff Debate:
Most discussions focus narrowly on whether Trump's tariffs would increase prices or restore manufacturing jobs. What's overlooked is their impact on service sector jobs—where most Americans actually work.
New @cato.org research brief on my research with @nickbloom.bsky.social , @kylehandley.bsky.social and Philip Luck about the effects of the China Shock on Job Reallocation and Industry Switching in U.S. Labor Markets.
www.cato.org/research-bri...
