In a recent Facebook post, AEI economist Mark Perry highlights evidence suggesting that the tariffs enacted in April by the Trump Administration have failed to generate job growth in the manufacturing sector (For those without Facebook, a reproduction of Mark’s graph is provided below. The solid red line marks the day the tariffs came into effect).
At first glance, this downward trend suggests that the tariffs are not fulfilling their intended purpose of revitalizing job growth in manufacturing.
Some critics argue that the graph is misleading, claiming that the truncation of the Y-axis exaggerates the decline. However, this critique misses the critical point: the overall trend is negative. While Trump and his allies anticipated a positive shift, the tariffs have instead exacerbated a declining trend.
A more plausible counterargument is that hiring processes in manufacturing typically require time to materialize. Even six months post-implementation, it is not reasonable to expect an immediate surge in hiring. What then, can we anticipate for future hiring trends?
Luckily, the Bureau of Labor Statistics (BLS) offers insights through their Job Openings and Labor Turnover Survey (JOLTS). This survey indicates the number of job openings, which serves as a precursor to hiring, as companies must advertise positions before filling them.
Since the tariffs were enacted, job openings have also seen a decline. Excluding the atypical post-pandemic recovery years of 2021–2022, when job openings surged as businesses sought to recover from lockdowns, manufacturing job openings averaged 543,000 per month in 2023 and 2024. In simpler terms, around half a million manufacturing positions were posted each month during this period. These openings, however, were not necessarily indicative of new jobs; rather, they represented unfulfilled positions. The BLS does not track the duration of job postings, but since Trump’s inauguration and the initial tariffs in February, the average number of job openings has decreased to 410,000. This translates to approximately 130,000 fewer job openings in manufacturing since the tariffs were instituted, suggesting that firms are curtailing their hiring rather than ramping it up. (It’s worth noting that these figures are seasonally adjusted, and theoretically, seasonal fluctuations should not apply.)
As reported by the Wall Street Journal, China is merely reallocating its exports from the United States to other markets. The US tariffs have not significantly diminished China’s share of exports, nor have they bolstered US exports. These findings suggest that the so-called “optimal tariff model,” championed by certain administration figures like Peter Navarro to justify these tariffs, is ineffective. In essence, US tariffs do not seem to be fortifying American manufacturing on the global stage.
Do these statistics definitively prove that tariffs are failing? Not necessarily. Establishing a causal relationship would demand far more comprehensive data, time, and study. However, they do indicate a troubling trajectory that contradicts the stated goals of these tariffs.
Why might these tariffs be falling short of their objectives? The theoretical underpinning of tariffs is that they should channel jobs into protected industries. If the intent is to shield manufacturing, then why aren’t jobs migrating there?
The rationale for implementing tariffs to safeguard manufacturing rests upon the assumption that imports consist primarily of final goods and that the protected nation enjoys tariff-free access to intermediate goods (the components used in manufacturing). In today’s America, this assumption is increasingly untenable. According to trade economist Doug Irwin from Dartmouth University, roughly 75% of US imports are these intermediate goods (Free Trade Under Fire (5th ed) Table 1.1, pg 14). This reality implies that tariffs inflate manufacturing costs in the US, rendering American manufacturing less competitive against foreign imports and in the global marketplace. Irwin elucidates:
“Any trade restriction that increases the price of an intermediate good raises the costs of production in downstream user industries with an adverse effect on employment in those industries. This means that when domestic firms are forced to pay more for their productive inputs, especially while competing with foreign rivals that are exempt from these taxes, employment in those sectors suffers.” (ibid, pg 100, emphasis added).
However, let’s steel-man the argument and consider what other factors may be contributing to this trend:
First, the tariffs are currently embroiled in legal disputes. A case challenging the tariffs is pending before the Supreme Court (Trump v. VOS Selections, consolidated with Learning Resources v. Trump). These legal battles have been ongoing since spring, with the initial challenge filed in April 2025 in the US Court of International Trade. Given the associated hiring costs, companies may be reluctant to ramp up hiring while this litigation is unresolved. It’s conceivable that a favorable outcome for Trump regarding tariffs could trigger a hiring surge. The primary issue I see with this argument, however, is that many plaintiffs in VOS are manufacturers themselves. It seems contradictory that they would oppose tariffs and then suddenly begin hiring if the tariffs remain in place.
Other plausible explanations may exist, but I struggle to identify them (feel free to share your thoughts in the comments).
