Employment Consequences of U.S. Trade Wars
This paper provides evidence on the short run and long run distributional effects of tariff shocks on employment in the United States. Using monthly data on tariffs and employment, I find that in the period of January 2017 to March 2019, commuting zones more exposed to Chinese retaliatory tariffs experienced a decline in employment growth, whereas U.S. import tariffs had no immediate effect on employment growth. I also study the employment effects of a hypothetical trade war between the United States and China by calculating counterfactual employment changes under three different retaliation scenarios and find that had the U.S. imposed tariffs in the 1991 2007 period on all products, the large job destroying effect of the 'China shock' would not have occurred, irrespective of the retaliation strategy pursued by China. However in the post recession period of 2010 2016, the 'China shock' no longer exists and therefore U.S. import tariffs would not have had a job creating effect. This result corroborates the findings of the short run analysis. JEL Classification: F13, F14, F16, F6