The Impact of the 2018-2019 Trade War on U.S. Local Labor Markets

34 Pages Posted: 18 Mar 2020

See all articles by Felipe Benguria

Felipe Benguria

University of Kentucky - Gatton College of Business and Economics

Felipe Saffie

University of Virginia - Darden School of Business

Date Written: February 19, 2020

Abstract

We study the impact of the 2018-2019 trade war on U.S. local labor markets, distinguishing between regional exposure to foreign tariffs on U.S. exports, U.S. import tariffs, and U.S. tariffs on intermediate inputs. We find foreign retaliatory tariffs on U.S. exports have led to an increase in local unemployment rates, and this effect is magnified for regions specialized in non-manufacturing tradable goods (e.g. agriculture). U.S. import tariffs, on the other hand, have had an impact on local labor market conditions primarily through input-output linkages, leading to a decline in the employment share in the manufacturing sector and a decline in regional earnings.

Keywords: Trade war, Trade policy, Tariffs, Unemployment, Employment, Earnings, Local Labor Markets

JEL Classification: F1, J2, J3

Suggested Citation

Benguria, Felipe and Saffie, Felipe, The Impact of the 2018-2019 Trade War on U.S. Local Labor Markets (February 19, 2020). Available at SSRN: https://ssrn.com/abstract=3542362 or http://dx.doi.org/10.2139/ssrn.3542362

Felipe Benguria (Contact Author)

University of Kentucky - Gatton College of Business and Economics ( email )

550 South Limestone
Lexington, KY 40506
United States

Felipe Saffie

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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