When Protectionism Kills Talent

Protectionist policies intended to revitalize US chip manufacturing backfired, ultimately weakening the domestic workforce they aimed to rebuild. Instead of fostering talent growth, these measures diminished hiring for critical science and engineering roles, particularly in entry-level positions and at firms impacted by tariffs. Companies reliant on foreign talent reduced domestic hiring and shifted recruitment to countries with more favorable immigration policies. US protectionism also discouraged students from pursuing chip-related degrees, contracting the domestic talent pipeline. Our conceptual framework shows that high proportions of foreign workers and inelastic labor supply in these occupations contribute to the adverse effects of protectionist policies.