A study found that Trump's massive new tariffs could end up costing America 149,000 jobs

  • President Donald Trump's newly announced tariffs on steel and aluminum could result in a net decrease in the number of employed Americans, according to a new study. 
  • Economists Joseph Francois and Laura Baughman said the tariffs would boost employment in metals industries by 33,464.
  • But they would cost downstream companies that rely on steel and aluminum about 179,334 jobs.

The new tariffs on steel and aluminum proposed by President Donald Trump could end up being a net negative for American workers, according to a new study.

The Trade Partnership, a consulting firm that does research on international trade, found that the tariffs could cost the US around 146,000 jobs.

The report estimated that the new tariffs, which act as a tax on imports, would help boost the steel and aluminum industries. But it said increased costs for industries that use those metals as an input would lead to overall job losses.

Economists Joseph Francois and Laura Baughman found that the new policy would increase employment in the US metals industry by 33,464 jobs. But it would decrease employment in other industries by about 179,334 jobs.

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Impact of Trump's proposed steel and aluminum tariffs
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Impact of Trump's proposed steel and aluminum tariffs
NEW YORK, NY - MARCH 1: A trader is comforted by a coworker as they work on the floor of the New York Stock Exchange (NYSE) on March 1, 2018 in New York City. Major stock indexes plunged Thursday afternoon following President Trump's announcement that he was imposing a 25 percent tariff on imported steel and 10 percent on aluminum. Investor concern about the news rattled the Dow Jones industrial average, which closed down more than 400 points. (Photo by Eduardo Munoz Alvarez/Getty Images)
SAN FRANCISCO, CA - MARCH 02: Wine in aluminum cans is displayed on a shelf at Ales Unlimited on March 2, 2018 in San Francisco, California. Beverage companies that use aluminum for canned drinks are concerned that tariffs proposed by US President Donald Trump could result in higher prices for consumers and job cuts across the industry. (Photo by Justin Sullivan/Getty Images)
U.S. President Donald Trump announces that the United States will impose tariffs of 25 percent on steel imports and 10 percent on imported aluminum during a meeting at the White House in Washington, U.S., March 1, 2018. REUTERS/Kevin Lamarque
Members of trade unions hold a protest against US President Donal Trump's import surcharge on Brazilian steel and in defense of their employment, outside the US Consulate in Sao Paulo, Brazil, on March 5, 2018. Since announcing last week plans to impose a 25 percent tariff on steel imports and 10 percent on aluminium, Trump has shrugged off threats from many nations, including China, Canada, Brazil and Mexico among others. / AFP PHOTO / Miguel SCHINCARIOL (Photo credit should read MIGUEL SCHINCARIOL/AFP/Getty Images)
SAN FRANCISCO, CA - MARCH 02: Beer in aluminum cans is displayed on a shelf at Ales Unlimited on March 2, 2018 in San Francisco, California. Beverage companies that use aluminum for canned drinks are concerned that tariffs proposed by US President Donald Trump could result in higher prices for consumers and job cuts across the industry. (Photo by Justin Sullivan/Getty Images)
White House Chief of Staff John Kelly and press secretary Sarah Sanders listen as U.S. President Donald Trump announces that the United States will impose tariffs of 25 percent on steel imports and 10 percent on imported aluminum during a meeting at the White House in Washington, U.S., March 1, 2018. REUTERS/Kevin Lamarque
NEW YORK, NY - MARCH 1: Traders work on the floor of the New York Stock Exchange (NYSE) on March 1, 2018 in New York City. Major stock indexes plunged Thursday afternoon following President Trump's announcement that he was imposing a 25 percent tariff on imported steel and 10 percent on aluminum. Investor concern about the news rattled the Dow Jones industrial average, which closed down more than 400 points. (Photo by Eduardo Munoz Alvarez/Getty Images)
Members of trade unions hold a protest against US President Donal Trump's import surcharge on Brazilian steel and in defense of their employment, outside the US Consulate in Sao Paulo, Brazil, on March 5, 2018. Since announcing last week plans to impose a 25 percent tariff on steel imports and 10 percent on aluminium, Trump has shrugged off threats from many nations, including China, Canada, Brazil and Mexico among others. / AFP PHOTO / Miguel SCHINCARIOL (Photo credit should read MIGUEL SCHINCARIOL/AFP/Getty Images)
Chairman, CEO and president of Nucor John Ferriola and U.S. Steel CEO Dave Burritt flank U.S. President Donald Trump as he announces that the United States will impose tariffs of 25 percent on steel imports and 10 percent on imported aluminum during a meeting at the White House in Washington, U.S., March 1, 2018. REUTERS/Kevin Lamarque
NEW YORK, NY - MARCH 1: A trader works on the floor of the New York Stock Exchange (NYSE) on March 1, 2018 in New York City. Major stock indexes plunged Thursday afternoon following President Trump's announcement that he was imposing a 25 percent tariff on imported steel and 10 percent on aluminum. Investor concern about the news rattled the Dow Jones industrial average, which closed down more than 400 points. (Photo by Eduardo Munoz Alvarez/Getty Images)
SAN FRANCISCO, CA - MARCH 02: Wine in aluminum cans is displayed on a shelf at Ales Unlimited on March 2, 2018 in San Francisco, California. Beverage companies that use aluminum for canned drinks are concerned that tariffs proposed by US President Donald Trump could result in higher prices for consumers and job cuts across the industry. (Photo by Justin Sullivan/Getty Images)
NEW YORK, NY - MARCH 1: Traders work on the floor of the New York Stock Exchange (NYSE) on March 1, 2018 in New York City. Major stock indexes plunged Thursday afternoon following President Trump's announcement that he was imposing a 25 percent tariff on imported steel and 10 percent on aluminum. Investor concern about the news rattled the Dow Jones industrial average, which closed down more than 400 points. (Photo by Eduardo Munoz Alvarez/Getty Images)
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The report used the Global Trade Analysis Project (GTAP) database to make the determinations, the same database the Commerce Department used to make recommendations advocating for the new tariffs.

The direct fallout would hit manufacturing companies dependent on steel and aluminum as inputs for their products, the report said. Increased prices for the metals would cause cuts to other costs such as labor. In total, the economists expect a net decline of 2,612 manufacturing jobs.

Francois and Baughman said that outside of the direct manufacturing hit, there would be serious repercussions for services industries that provide support to manufacturers. Workers in fields like communications and insurance could feel some of the downstream effects.

Additionally, some consumer industries would see declines in employment as household scale back their spending in response to higher prices. 

"Consumers have reduced spending power when they are hit by higher costs (of a new car, a new washing machine, etc.) and, for many, lost wages from unemployment," the study said. "As a result, households pull back on spending; services like education, entertainment and even healthcare are on the front lines of the spending reduction impacts, with additional attendant job losses."

In other words, if steel and aluminum costs rise, so too will prices of items made with those materials. Consumers will then feel the squeeze and buy fewer items, dealing another blow to consumer-sensitive businesses and causing cutbacks.

The majority of these job losses, according to Francois and Baughman, would come from lower-paying industries.

"High-skilled jobs (managers, professionals, technicians and related workers) account for one-third of the net job losses," the economists said. "Low-skilled workers (production workers, machine operators, office workers, administrative workers, sales/shops staff, and farm workers) bear the brunt of the tariffs, accounting for two-thirds of the total job losses."

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