Don't expect Trump to benefit American workers' robots.

Recently, the Trump administration launched a new round of intimidation against trade. Two months ago, softwood became headline news: US Secretary of Commerce Wilbur-Ross announced tariffs on Canadian timber imports, and he believes that Canadian imports of timber put prices below US competitors.
Today, steel has become a focus of attention. In the next few days, Ross is expected to publish a report outlining how cheap steel imported from China and other countries is hurting US companies, harming US “national security” and eroding US employment. This is likely to lead to high tariffs on steel in the United States – a threat that has sparked strong protests from other world leaders, including Merkel in Germany.
It is not clear how much damage the tariff will have. But it is clear that White House officials urgently need to read a timely analysis of the issue from the Bank for International Settlements (BIS).
Under normal circumstances, BIS – playing a role like a central bank club – does not discuss too much about trade, but instead focuses on finance. But recently Western central banks are worried about protectionism. So BIS conducted a simulation analysis in the annual report published at the end of June: What might happen if the White House decided to impose a 10% tariff on all goods imported from Mexico and China.
According to BIS, the simulation results show that “the US manufacturing cost has a relatively large sensitivity to import tariffs on Mexican or Chinese goods”; more specifically, tariffs will directly and indirectly damage businesses located in the United States. The transportation equipment industry was the most affected, followed by the leather, petroleum, textile, machinery and electrical equipment industries.
However, interesting and worthy of the White House's deep thought (although it does not currently threaten to impose a 10% tariff), BIS economists also calculated the impact this could have on labor costs. The results show that if transportation companies such as automakers want to absorb the cost of assumed tariffs and keep their products competitive, they must cut wage costs by 6%; for other industrial companies, they need to cut by 2% to 4%.
This may mean a drop in wages. But the more likely response is that companies will simply replace workers with more robots. After all, companies have done this. As the interesting reports recently published by economists Daron Acemoglu and Pascual Restrepo show that the US industry is using it at an alarming scale. Robots replace workers, especially in the automotive industry (which has one-third of industrial robots).
In fact, economist Laura Tyson uses the data of Asimoglu and Restrepo to figure out that over the past 20 years, robots have replaced 400,000 manufacturing jobs in the US each year – which has led to Manufacturing labor has fallen by a third since 1997, despite record-breaking production capacity.
Therefore, if new tariffs are imposed and new costs are imposed, executives are likely to use this as an excuse to accelerate the automation process. To make matters worse, when American companies install industrial robots, they often buy from Germany and Japan, because these two countries are ahead of the world in advanced industrial robots.
So far, the White House seems to be less concerned or even paying attention to this. On the contrary, Trump tends to support the idea of ​​"Made in the USA" at almost any cost. Coincidentally, he may really see in the next few years that the manufacturing industry is returning more to the United States.
Not long ago, consulting firm McKinsey released a report on US manufacturing. The report believes that the conditions for the US industrial recovery have matured because "the world's value chain is in turmoil, which creates an opportunity for the United States to occupy more manufacturing shares."
In particular, “wage levels in emerging economies are rising, and automation has weakened the rationale for shifting production to lower-cost labor areas, and shale gas booms have made (US) energy cheaper and more abundant”. All of this is good for the return of manufacturing.
But the key is that industrial recovery is not the same as job creation. On the contrary, the reason why American companies return to the United States is that they can cut labor costs. Or to put it another way, if punitive tariffs are imposed on imported steel, these tariffs will improve the fate of US steel companies.
Tariffs may also win some political slogans for Trump. But don't expect tariffs to help many American workers. Instead, the robot is the "winner." However, of course, the robot will not vote.

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