Tariff rises, trade tensions and labour markets: Employment impacts and policy implications

Trade tensions put millions of jobs at risk worldwide

The findings are striking. Across four scenarios—from broad tariff increases and retaliation to partial de-escalation and tariffs linked to forced labour—global employment declines in every case. Estimated job losses range from 7.8 million to 23 million, with retaliation producing the largest overall impact. Even partial de-escalation leaves substantial employment losses, demonstrating how disruptions to production networks and global supply chains can continue to affect workers.

The burden is also highly uneven. China and developing economies in Asia are particularly exposed because of their deep integration into global value chains. Yet tariffs can also undermine employment in the countries imposing them.

Most concerning is who bears the cost. Informal workers account for more than half of estimated job losses across all four scenarios, while unskilled workers account for around four-fifths. These workers are often those with the least access to social protection, income support, training and other mechanisms that can cushion labour-market shocks.

The findings point to a clear policy imperative: trade policy cannot be separated from employment and social policy. Replying to trade tensions requires integrated approaches that combine trade and industrial policies with skills development, active labour-market policies, social protection and support for affected workers and firms.