Trump tariffs would lift US factory jobs, cut overall income, San Francisco Fed says

Yahoo

14-07-2025

(Reuters) -The Trump administration's tariffs are likely to boost U.S. manufacturing jobs and real income in a majority of states, but lower employment and income adjusted for inflation in the country as a whole, new research from the San Francisco Federal Reserve showed on Monday.
Assuming a 25% increase in U.S. tariffs on imports from Canada and Mexico, 30% levies on Chinese goods, and 10% on the rest of the world, economists at the regional Fed bank estimated a 0.2% drop in U.S. employment over the next four years, as a reduction in U.S. services and agricultural jobs overwhelms a projected jump in manufacturing employment.
And while income adjusted for inflation would likely increase in 31 of the 50 states, they found, the rest - including large states like California and Texas - would see declines, resulting in an overall 0.4% drop in U.S. real income.
"The states that lose the most from tariffs tend to have close trading links with the countries most affected by the tariffs," the researchers wrote, noting that real income could drop by more than 2% in some states and rise as much as in 1.7% in others.
The research, published in the San Francisco Fed's latest Economic Letter, is part of an ongoing effort at the U.S. central bank to try to figure out the real impact of President Donald Trump's tariffs on inflation and the labor market as policymakers consider when they may need to resume interest rate cuts to support a softening economy.
It is not meant as a precise forecast, the researchers noted. That's partly because the level of tariffs could be higher or lower than the late-May levels used in the analysis.
The tariffs the Trump administration has indicated will be in place by August 1 would be more onerous than those used as the basis for the San Francisco Fed analysis.