Trump tariffs may accelerate automation, not create jobs: economists
NEW YORK, UNITED STATES — Some economists warn that United President Donald Trump’s new tariffs may have unintended consequences. Instead of creating jobs, they could accelerate automation in manufacturing as companies seek to offset higher labor costs associated with moving production back to the U.S.
Automation incentives could increase
Carl Benedikt Frey, an economist at Oxford University specializing in artificial intelligence (AI) and labor, argues that higher costs in the U.S. will push companies toward automation.
“There’s no reason whatsoever to believe that this is going to bring back a lot of jobs,” Frey told TIME.
“Costs are higher in the United States. That means there’s an even stronger economic incentive to find ways of automating even more tasks.”
Historically, low labor costs abroad have discouraged investments in automation due to its high upfront expenses. But tariffs forcing companies to relocate production to costlier regions could shift that calculation.
Nobel Prize-winning economist Daron Acemoglu predicts that while short-term disruption may limit immediate automation investments, persistent tariffs could eventually force companies to adopt AI and robotics for efficiency.
Advances in robotics and AI
Technological progress since Trump’s 2018 tariffs may make automation more feasible this time around. Improvements in general AI systems and robotics have made machines more adaptable and capable of performing complex tasks.
Lucas Hansen, co-founder of CivAI, notes that applying advanced AI models to robotics now requires less effort and investment than before.
“If you’re a mid-sized manufacturing operation, previously you would have had to invest tons of money in R&D to automate everything,” Hansen said. “But now, it will require a lot less marginal effort.”
Still, skeptics like Acemoglu caution that flexible robots remain years away from widespread use. Even if automation accelerates, experts like Erik Brynjolfsson from Stanford University argue that productivity gains are unlikely to offset economic inefficiencies caused by tariffs.
AI’s role in labor remains uncertain
The Trump Administration has expressed optimism about AI benefiting workers rather than replacing them.
“We refuse to view AI as a purely disruptive technology that will inevitably automate away our labor force,” Vice President JD Vance said in February.
“We believe and we will fight for policies that ensure that AI is going to make our workers more productive, and we expect that they will reap the rewards.”
However, labor historian Brian Merchant warns that downturns often lead companies to embrace automation for leverage over labor protections—a trend that could repeat itself under current conditions.
