“U.S. factory activity contracted in May for a fourth consecutive month and a gauge of imports fell to a 16-year low as firms pulled back in the face of higher tariffs,” reports Bloomberg News. “Two of the report’s trade-related indexes highlighted the widespread uncertainty caused by the uneven rollout and frequent changes in tariffs.”
Tariffs result in increased costs to manufacturers for the raw materials and inputs they need to manufacture their products. Economists had warned that tariffs would shrink manufacturing output and slow economic growth.
For example, tariffs on steel wipe out more jobs than they save, because “steel is produced by a tiny sliver of the economy, but used as an input by a much broader swathe of manufacturers,” notes Justin Wolfers, an economist at the University of Michigan.
President Trump recently announced that he will raise tariffs on aluminum and steel from 25% to 50% starting June 4. That could wipe out many jobs in the auto industry, construction, and tool and machine industries, which rely on steel as an input in production. President Trump should create exclusions to those tariffs for automakers so that they can continue to produce autos for a reasonable price. If he doesn’t, thousands of jobs will be lost in the auto industry.
As Investopedia notes, steel and aluminum tariffs have a history of wiping out more jobs than they save: The steel and aluminum tariffs Trump imposed back in 2018 shrank employment by 74,000 jobs, wiping out 75 times more jobs than they saved.
Sometimes, when antidumping duties are imposed on steel imported from foreign countries, automakers are excluded from those antidumping duties to enable them to obtain affordable steel. Such an exclusion to these tariffs for automakers is needed to prevent auto industry jobs from being lost due to these tariffs.
Many manufacturers will not obtain any such exclusions, and the increased costs they experience, due to tariffs, will result in them hiring fewer workers, or even laying off factory workers. Tariffs can cause considerable economic harm and wipe out thousands and thousands of jobs.
