Trump’s Tariffs Poised to Impact Job Market and Consumer Prices: UWM Business Professor

Although the US appears to be heading toward a possible trade war, the steel and aluminum tariffs imposed Wednesday by the Trump administration may affect the job market and prices of goods on their own.

The Trump administration’s 25% tariffs on all steel and aluminum imports drew quick responses from Canada and the European Union, with both announcing they would respond with tariffs of their own, the Associated Press reported. The EU intends to impose duties on a slate of American-produced consumer goods, while Canada seeks to retaliate with their own steel and aluminum tariffs.

Hours later, Trump said the US would respond to the EU with a 200% tariff on European alcohol products, opening up the possibility of a trade war.

Tailan Chi, a professor at the University of Wisconsin-Milwaukee and an expert in international business, said the Trump tariffs on steel have a strong chance of at least restoring the struggling industry in the US.

Wednesday’s steel and aluminum tariffs were the Trump administration’s plan to revitalize those industries domestically, CNN reported.

“With tariff protection, they get to have a higher chance of survival, make more profit, and possibly hire more people,” Chi said. “But the question is: will more jobs be lost in the downstream industries that use steel?”

The downstream industries Chi is referring to produce the things made from raw materials. Anything from the production of nails to refrigerators to cars are downstream industries. Chi said that these products are much more labor-intensive to manufacture, and produce more jobs as a result. 

A similar steel tariff was implemented in 2002 by then-President George W. Bush. According to Chi, this move succeeded in retaining jobs in the American steel industry but forced downstream industries out of the country as raw materials became too expensive to continue operating in the US. While one industry retained jobs, a host of other industries vanished from the job market.

“Based on prior studies,” Chi said, “it’s almost certain that more jobs will be lost than jobs created or preserved in the steel industry.”

So, what about the price the average consumer pays?

“It will go up,” Chi said, “How much it goes up depends on whether these downstream consumer products are subject to tariffs.”

The problem consumers will face is not the price of steel and aluminum, but rather the price of the goods that rely on the price of steel and aluminum. Chi explained that when raw material imports like these are tariffed, downstream businesses can choose to move their operations elsewhere to avoid an increase in production costs.

“Consumers can buy the same products, such as nails, for instance, from overseas,” Chi said. “In that case, [prices] may go up a little bit.”

This means foreign-made consumer goods that use steel and aluminum may be relatively cheaper than those manufactured in the US because they have access to cheaper raw materials. 

“Even cars made in Japan, Germany and South Korea will be relatively cheaper because they have access to cheaper steel and aluminum,” Chi added.

With a growing flurry of tariffs between the US and countries like Canada, Mexico, China and those in the European Union, the possibility of a tariff on consumer products is already a looming possibility. 

Exactly how long the tariffs on steel and aluminum will last, is speculative at best. Chi said it’s up to how the market reacts, and how the Trump administration responds in turn. The possibility of a recession or a loss in voter confidence for the 2026 midterms, for example, could have the potential to change the Trump administration’s mind. 

For now, however, Trump shows no sign of de-escalating with the United States’ trade partners.