Tariffs and Labor Markets: The Employment Impact of the Recent Trade Conflict

This paper assesses the global employment and trade effects of renewed tariff escalation following the reintroduction of the United States' America First strategy in 2025. Using a multiregional input-output (MRIO) framework integrated with a trade model, the analysis captures endogenous adjustments in bilateral trade shares and final demand in response to changes in prices and competitiveness. Three scenarios are simulated to reflect alternative configurations of trade policy: existing tariffs without retaliation, updated tariffs including retaliatory measures, and a potential scenario characterized by de-escalation of the trade conflict. The results indicate that tariff increases generate widespread employment and export losses, with cumulative global job declines exceeding 23 million in the most adverse scenario. Informal and low-skilled workers bear the largest burden, accounting for more than 80 percent of total employment losses, while high-income and upper middle-income countries experience significant contractions in export volumes.