No Manufacturing Jolt from Tariffs

Writing on Facebook, AEI economist Mark Perry points to evidence that the tariffs imposed in April by the Trump Administration have not resulted in job creation for the manufacturing industry (Mark’s graph is recreated below for those of you who do not have access to Facebook. The solid red line indicates the day the tariffs were imposed).

Prima facie, this decline indicates the tariffs are not working to “bring back” jobs. 

Some folks have objected that this graph is deceptive. Truncating the Y-axis makes the decline appear worse than it is. This objection misses the point: the trend is negative. Trump et al predicted the trend would be positive; the tariffs were supposed to reverse this declining trend. They got the direction wrong.

A more reasonable objection is that it takes time for manufacturers to hire. Even six months in, there’s no particular reason to think that manufacturing hiring would suddenly jump. What about future hiring trends?

Fortunately, the Bureau of Labor Statistics publishes that data. The BLS publishes their Job Openings and Labor Turnover Survey (JOLTS). Job Openings (series IDJTS300000000000000JOL) would be an indicator of future hiring as firms need to post their jobs before they can hire people.

Since the tariffs were imposed, job openings are down, too. Excluding the post-pandemic recovery years (2021–2022, when openings and hirings were unusually high as firms ramped back up after the lockdowns), manufacturing job openings averaged 543,000 job openings per month in 2023 and 2024. In other words, over the past two years, approximately half a million open manufacturing jobs were listed each month. These were not necessarily new job openings; they were just unfulfilled jobs. The BLS doesn’t track how long job postings are up. Since Trump’s inauguration and the initial tariffs declared in February, job openings have averaged 410,000. In other words, there are approximately 130,000 fewer job openings in manufacturing since the tariffs were imposed than before. The fewer openings indicate that firms are slowing their hiring, not increasing it. (Note: these data are seasonally-adjusted. In theory, there shouldn’t be seasonal swings.)

As recently reported by the Wall Street Journal, China is merely shifting exports from the United States to other countries.  The US tariffs haven’t done much to reduce Chinese export share, and certainly aren’t doing anything to help increase US exports.  Indeed, these results indicate the “optimal tariff model,” invoked by certain members of this administration, such as Peter Navarro, to justify tariffs, likely doesn’t apply. The point here is that US tariffs do not seem to be improving US manufacturing in the global sphere.

Do these data prove that tariffs are failing? Not necessarily. To do a causal analysis would require far more data, time, and research. But they are indicative that the tariffs are failing to accomplish their (oft-contradictory) goals.

Why are the tariffs failing to accomplish these goals?  In theory, tariffs should shift jobs to the protected industries.  If these tariffs protect manufacturing, why aren’t jobs shifting there?  

The argument for tariffs to protect manufacturing relies on an assumption that the imports are of final goods and that the protected country has tariff-free access to intermediate goods (the goods used in manufacturing).  In 21st-century America, that assumption doesn’t hold.  According to Dartmouth University trade economist Doug Irwin, approximately 75% of US imports are these intermediate goods (Free Trade Under Fire (5th ed) Table 1.1, pg 14).  This means that tariffs raise the cost of manufacturing in the US, and thus make US manufacturing less competitive against both foreign imports and in the global market.  As Irwin explains:

But let us steel-man and consider what other factors could cause a similar pattern:

For one, these tariffs face legal challenges. As of this writing, a legal challenge to the tariffs has been argued before the Supreme Court (Trump v. VOS Selections, consolidated with Learning Resources v. Trump). These cases have been ongoing since the spring, with an initial challenge filed in April 2025 in the US Court of International Trade. Given the costs of hiring, firms may be hesitant to hire while this case is pending. It’s possible that a resolution in favor of Trump on tariffs could set off a hiring bonanza. A major problem I see with this argument: many of the plaintiffs in VOS are manufacturers themselves. It’d be odd that they are arguing against tariffs and, if the tariffs hold, they’ll just start hiring.

There may be other reasonable claims out there, but I cannot think of any (share in the comments if you have thoughts).