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Job losses
But what about the impact of tariffs on job creation? Surprisingly, an increase in import taxes has been found to result in slightly more unemployment across countries.
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An example provided by Irwin at Dartmouth College points to one plausible explanation — and it has to do with the steeper cost of imported goods.
“A number of studies have shown, on net, we lost jobs from the (2018) steel tariffs rather than gained jobs because there are more people employed in the downstream user industries than in the steel industry itself,” he said.
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A study by the Federal Reserve Board found that a rise in input costs resulting from US tariff hikes in 2018-19 led to job losses in American manufacturing. The damage from those higher expenses was compounded by retaliatory taxes on US exports, more than offsetting a small boost to manufacturing employment from US tariffs — at least so far, the 2024 paper said.
Retaliation by other countries is indeed another danger of pulling the tariff lever. Higher tariffs on American exports would typically raise their prices for foreign consumers, hitting demand for the goods in many cases.
When Trump announced new tariffs this year, America’s major trading partners were quick to strike back with their own levies, although the US then agreed a temporary truce with China and the European Union.
Costs of free trade
While economists generally agree that free trade has benefited the global economy in recent decades, they acknowledge that it comes with certain costs.
One is the loss of jobs in communities that are particularly exposed to new competition from foreign manufacturers.
That is similar to the impact of technological progress on workers. “Manufacturing jobs as a share of the labor force have come down everywhere. It isn’t a US-specific story,” said Gimber at JPMorgan Asset Management, pointing to automation.
He drew a parallel between helping workers affected by higher imports and what is known as a just transition — the idea that the drastic changes needed to move toward a greener economy should be fair to everyone and minimize harm to workers and communities.
In both cases, providing workers in impacted industries with new skills or retraining them could be key, Gimber said.
Another potential cost of free trade is dependency on far-flung manufacturers. That took on new relevance during the pandemic, which snarled global supply chains, contributing to shortages of products such as face masks and respirators in the US and elsewhere.
However, economists do not typically see tariffs as a good way to build up domestic manufacturing, Fatas at INSEAD said, noting that subsidies for specific industries are viewed as a better tool “because they work more directly.”
But perhaps the strongest argument in favor of free trade is its importance to maintaining peace between nations.
As Gimber’s colleague David Kelly noted in March, closer trade relations give countries more to lose in any conflict. |
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Health influencer @drmercola suggested to his 504,000 followers whether, while the media focused on climate change, the fires might have been deliberately set to “to facilitate a land grab” to make the area a “smart city” — referring to a technology-focused urban design idea.
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A natural parenting influencer, whose Instagram page is filled with soft-focus pictures of herself against pretty pastel backgrounds, implied to her 76,000-strong community that Hawaii’s wildfires were started by “directed energy weapons” — systems which use energy such as laser beams.
These posters are all wellness influencers — a loosely-defined umbrella term for a wide range of accounts including yoga, lifestyle, fitness, alternative health and new age spirituality.
While conspiracy theories about the Hawaii wildfires spread across the internet last year, it may seem surprising they were also seized upon by part of the wellness community.
But for years there has been a merging of wellness, disinformation and conspiracy, as a subset of influencers use the backdrop of aesthetically pleasing, pastel-colored posts to spread much darker messages, weaving together alarming conspiracy theories with calls for users to buy their supplements or services.
This phenomenon exploded during the pandemic, when anti-vax sentiment took hold in large parts of the wellness community. As interest in the pandemic waned, experts say some wellness influencers have latched on to climate change to galvanize followers.
Their concern: Those influencers — some with hundreds of thousands of followers — are exposing new, and younger, audiences to a slew of misinformation and undermining efforts to tackle the climate crisis. |
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