Protection and Real Wages: Simulations Including Energy Input

Henry Thompson ()
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Henry Thompson: Auburn University

International Economics and Economic Policy, 2025, vol. 22, issue 4, No 10, 10 pages

Abstract: Abstract Tariffs raise the real price of the factor of production intensive in import-competing production in factor proportions trade theory. Primary energy input is highly intensive in manufactures accounting for over a quarter of revenue. Theory suggests a high tariff regime in the US would result in a higher price of energy input. In the present simulations, energy surfaces as the only winner due to tariffs with the return to middle factor capital falling along with the wage and output of labor-intensive services. Tariff policy now rests in the hands of lobby spending industries and labor unions, logrolling Congress, and some discretion for the President. The erratic tariffs since 2018 suggest laws and practice should be redesigned.

Keywords: Import tariffs; Factor intensity; Stolper-Samuelson theorem; Energy input (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10368-025-00692-6

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