International Trade and Jobs

International Trade and Jobs

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Updated May 17, 2024
International Trade and Jobs
The 118th Congress is engaged in a range of legislative and
negotiations, the ITC provides a report to the President and
oversight activities related to trade. The impact of trade
Congress mandated under Section 2104(f) of the Trade Act
agreements on U.S. jobs has been a key, long-standing
of 2002 (P.L. 107-210) that assesses the likely impact of a
policy consideration for Members of Congress. There is
proposed FTA on the U.S. economy, including the impact
broad consensus among economists that, in the aggregate,
on employment. For example, the ITC’s 2019 assessment of
the economic benefits of trade, such as lower prices and a
the likely impact of the U.S.-Mexico-Canada Agreement
greater variety of goods and services, outweigh the costs.
(USMCA) estimated that USMCA would raise U.S.
Because the gains from trade tend to be more widely
employment by 176,000 jobs and increase wages by 0.27%
dispersed than the losses, the benefits are often not readily
after USMCA is fully implemented and firms and workers
apparent or well quantified. Affected stakeholders often
have adjusted to the agreement. In a 2021 report required
point to offshoring, job losses, stagnant wages, and rising
by the Bipartisan Congressional Trade Priorities and
inequality among some groups as indicators of the costs of
Accountability Act of 2015 (P.L. 114-26), the ITC
trade agreements. There is also broad consensus among
estimated that trade agreements added 485,000 jobs to the
economists that factors other than trade, such as the
U.S. economy between 1984 and 2017.
adoption of new technologies, affect jobs and wages, and
that the impact of trade agreements can be difficult to
The Biden Administration has committed to pursuing a
disentangle from that of other factors.
worker-centered trade policy that it states aims to protect
workers, drive wage growth, and strive for improved
The economic impact of trade agreements on jobs is widely
economic outcomes for workers; it has not pursued major
debated among Members of Congress, academics, and civil
measures to open markets or initiated new FTA
society. Multiple government agencies produce estimates of
negotiations. Instead, the Administration has pursued trade
the impact of trade on jobs to inform policymaking.
initiatives, such as the Indo-Pacific Economic Framework
Congress may weigh the relationship between international
for Prosperity (IPEF), that focus on specific trade-related
trade and employment in its trade policy and oversight
issues. IPEF, for example, contains pillars dedicated to
decisions, particularly with respect to the agencies
building resilient supply chains and fostering investments in
responsible for economic analysis of trade agreements and
clean energy. Quantifying the impact of these measures on
the programs that provide trade adjustment assistance for
trade flows, employment, and other economic outcomes
firms, workers, and farmers.
may be more difficult than with past FTAs that have
focused primarily on lowering tariff and nontariff barriers.
Estimating the Impact of Trade on Jobs
Economists and government agencies use economic models
Jobs Supported by Exports
to estimate the impact of trade on the economy (see text
Broader measures of how many jobs in the U.S. economy
box). Estimates from these models inform policymakers’
are related to international trade may be a useful indicator
evaluations of trade policy. Despite some limitations,
of how trade agreements that are already implemented
models provide policymakers with estimated impacts on
continue to support U.S. jobs. The Department of
industries, including output, employment, and wages.
Commerce’s International Trade Administration (ITA)
estimates the average number of jobs that are supported—
International Trade Theory and Models
not created—by exports in the U.S. economy. The estimate
Trade models relate firms’ supply of goods and services with
considers the average relationships between the value of
domestic and foreign consumers’ demand based on
goods and services in the economy relative to the average
relationships derived from international trade theory. Models
number of jobs that are required to produce that output for
examine how a particular change in trade policy (e.g., the
each industry, the value of inputs used in their production,
removal of a tariff) affects prices and ultimately supply and
and the value of transportation and other marketing services
demand of goods and services. Trade theory generally
required to bring goods and services to buyers.
assumes that firms adjust their hiring or wages due to these
impacts. Estimates of the impact on jobs and wages from
As shown in the left side of Figure 1, the ITA estimated
trade models are based on assumptions about how firms use
that in 2021 (latest data available), U.S. exports of goods
labor and other inputs to produce goods and services.
and services supported 9.05 million jobs—6.1 million in the
goods producing sector and 2.9 million in services. Among
Trade Agreements and Jobs
jobs in services sectors, exports supported the most jobs in
professional and technical services, 1.4 million in 2021.
In evaluating potential new trade agreements, Congress has
considered estimates of the agreement’s potential impacts
These estimates represent an increase from 2020 but still

fall below the estimates for 2019. In 2020, the first year of
on U.S. jobs. The U.S. International Trade Commission
the COVID-19 pandemic, U.S. exports decreased
(ITC) provides advice on trade negotiations and economic
analysis of free trade agreements (FTAs). During trade
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International Trade and Jobs
significantly, so the number of U.S. jobs supported by
also support a broad range of widely dispersed service-sector
exports also decreased.
jobs, including transportation, sales, finance, marketing,
insurance, and accounting. A methodology to calculate the
Figure 1. Jobs Supported by Exports in Goods and
number of jobs supported by imports would have to take
Services, 2000-2021
these factors into account.
Issues for Congress
Congress could consider legislating or conducting oversight
in a number of areas related to the agencies conducting
economic analysis of the impact of trade on jobs and the
programs designed to aid firms and workers affected by
import competition. Congress could consider evaluating the
current state of data and analysis on trade and employment
to determine how best to improve that data, assess how it
can be used to provide more informed estimates on the

long-run impact of trade on employment, consider the need
Source: International Trade Administration.
for programs to address these potential outcomes, and
evaluate how to weigh the impact of jobs against other
The ITA also estimates the number of jobs supported by a
economic impacts of trade, such as prices. Potential
billion dollars of exports of goods and services (right side
legislative options Congress could consider include the
of Figure 1). The number of U.S. jobs per billion dollars of
following:
exports has been steadily decreasing over the past two
• Requiring the President to develop methods of
decades, arguably due to higher productivity and
evaluating the employment effects of limited trade
advancements in technology and automation that result in
agreements (e.g., IPEF or trade protocols with Brazil
the need for fewer workers for every dollar of goods and
and Ecuador), particularly in comparison to FTAs such
services produced. The decline in jobs supported per billion
as USMCA, and report these findings to Congress.
dollars of exports became more pronounced during the
•
pandemic, reflecting the decrease in total U.S. exports. This
Directing the ITC to conduct detailed, sector-specific
measure shows that a billion dollars of goods exports
analyses after the implementation of a trade agreement
supports more jobs than a billion dollars of services exports.
or initiative, such as the ITC’s study on the economic
impact of the automotive rules of origin in USMCA.
The ITA’s estimates capture the average number of jobs
• Directing the ITA to develop a methodology for
supported by exports across the economy at a particular
assessing jobs supported by imports, thus filling a gap in
point in time. Labor advocates and policymakers refer to
available trade data and helping to inform debates about
data on U.S. jobs developed by the ITA to estimate the
the interaction between trade and employment.
impact of changes in trade on jobs, at times not using the
data as intended. The ITA has cautioned against using these
• Considering whether or not to fund worker retraining
estimates to assess changes in jobs associated with changes
programs, and how such programs might be structured.
in trade (e.g., assessing the impact on employment
For example, Trade Adjustment Assistance (TAA),
associated with the implementation of an FTA that has an
which expired in 2022, was a program designed to help
impact on trade flows). Although the ITA’s estimates have
trade-affected workers adjust to job loss resulting from
limitations, these estimates provide a bird’s eye view into
increased foreign competition. Some Members of
how many U.S. workers are involved in the production of
Congress have expressed interest in reinstating TAA.
exported goods and services. This may be a useful indicator
The Biden administration also has expressed interest in
to consider the scope of potential workers affected
seeing TAA reauthorized. Studies of TAA have found
positively or negatively by future agreements.
that while enrolled workers had access to training and
reemployment services, the program may not have been
To date, the ITA has not developed an import-focused
effective at increasing incomes or employment.
methodology due to the unique challenges in assessing the
CRS Research Associate Riley Rice contributed data
relationship between imports and employment compared
analysis, research, and writing to this report. James K.
with exports (see text box).
Jackson, former CRS Specialist in International Trade and
Challenges in Estimating Jobs Supported
Finance, authored the original version of this report.
by Imports
Danielle M. Trachtenberg, Coordinator, Analyst in
The composition of U.S. imports is fundamentally different
International Trade and Finance
from that of U.S. exports. While some imports and exports
Andres B. Schwarzenberg, Specialist in International
represent clearly substitutable items, which may adversely
Trade and Finance
affect U.S. jobs, other imports represent inputs to further
M. Angeles Villarreal, Specialist in International Trade
processing or are items that either are not available or are
not ful y available in the domestic economy, all of which could
and Finance
be complementary to U.S. jobs. While some job losses
IF10161
associated with imports can be highly concentrated, imports
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International Trade and Jobs

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https://crsreports.congress.gov | IF10161 · VERSION 11 · UPDATED