'America First!' What are the Job Losses for Belgium and Europe?

Abstract

This report is the first to estimate employment effects of looming American protectionism under US president Trump. We study the economic impact of a tightening of US trade policy on Belgium and on every EU member state, which we refer to as “America First” or “Trumpit” (like “Brexit”). Our estimates of EU job losses are based on the interconnectedness of an EU country with the US economy. We do this by taking into account the inter‐sectoral linkages between sectors within a country and between EU countries using sectoral input‐output data (World Input Output Database, WIOD). Thus, we consider EU jobs involved in direct EU exports to the US, as well as EU jobs corresponding to indirect exports from Europe to the US. Our study covers both exports of goods and services and accounts for services used as an input in goods. Our estimates are based on domestic value added rather than gross export values, since EU jobs are a function of domestic value added only. For Belgium, job losses of Trumpit range between 1200 and 5000 job losses, depending on the US tariff increase. Similarly, for the EU, job losses range between 50,000 and 240,000 jobs that will be lost depending on the US tariff scenario. For the EU, we find that the export value that will be lost ranges between 5% to 24 %, depending on the extent of the US import tariff increase. This corresponds to European GDP losses that range between 0.1 % to 0.4% of total EU GDP.