Understanding the Impact of Tariffs on the Global Labor Market

Over the past week, we received several questions about tariffs’ impact on the global labor market. It’s a complex—and at times uncomfortable—topic, but one that deserves serious attention. Understanding this issue is critical for strategic workforce planning (SWP), Talent Acquisition (TA), and broader HR leaders, especially as trade dynamics continue to evolve rapidly.

Given the uncertainty and limited clarity in some areas, we approached the topic academically, using multiple data sources to model the potential job impact across countries. Our focus in this analysis phase was to estimate potential job impacts by region (a directional macro view). We did not include job creation effects, such as those that may occur in some instances, as we currently lack a robust modeling framework in this aspect. However, this is an area we will continue to explore and update as more insights emerge.

Modeling Approach: 

Global Impact

Our Approach estimates the potential job impact from increased U.S. tariffs on exports from various countries. It starts by calculating the total value of exports to the U.S. and applies an assumed tariff rate. A portion of this cost is assumed to be absorbed by the exporters, and most of that absorbed cost is considered to affect the country’s GDP. Since some companies may recover by shifting to other markets, only a portion of the GDP impact is treated as a true economic hit.

Next, the model uses the number of jobs supported per million dollars of export to estimate the number of jobs exposed to risk. Finally, it assumes that 20% of these jobs can be saved through reskilling or redeployment, resulting in an approximate number of potentially impacted jobs.  We also acknowledge that the impact may be higher in some industries.  Companies may adopt and evolve differently, and the impact across industries may not be felt evenly.  As a result, please treat this model as a very directional model to help you think through the scenario.  

The model simplifies many factors but helps HR and workforce planners estimate which countries and sectors may face workforce disruptions due to tariff changes.

The table below shows the detailed calculation and assumptions 

US Impact

Our approach estimates the potential job impact on the U.S. workforce from retaliatory tariffs imposed by other countries on U.S. exports. It starts with the 2024 export value to each country and applies an assumed tariff rate. A portion of the tariff cost is considered to be absorbed by U.S. exporters, with most of that cost affecting GDP. After adjusting for a small recovery through alternate markets, the model estimates how many jobs could be at risk, based on a fixed ratio of jobs supported per million dollars of exports. Finally, it assumes that 20% of these jobs could be retained through reskilling or redeployment, resulting in a total estimated potential job impact of approximately 486K.  Like the global analysis, different sectors and companies will adopt and evolve differently and treat this as directional analysis.  

Call to Action for SWP Planners and Talent Acquisition Leaders 

1. Plan for Mixed Outcomes—Losses and Gains
2. Invest in Reskilling and Internal Mobility
3. Partner Closely with Supply Chain and Finance
4. Build a Global Talent Resilience Map (Draup can help with this analysis)
5. Use Data to Shape Narrative and Advocacy

Summary:  Draup has built a model to understand the impact of Tariffs on the Global Labor Market.  If you need the spreadsheet to model some scenarios yourselves, kindly let us know, and we will send it.  Also, if you have new modeling ideas, kindly let us know, and we will evaluate and share the results.