When Protectionism Kills Talent

Abstract

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 resulted in a significant decline in hiring for critical science and engineering roles, particularly in entry-level positions and at firms heavily impacted by tariffs. Companies heavily reliant on foreign talent cut back on domestic recruitment and instead shifted to hiring in countries with more favorable immigration policies. US protectionism also discouraged students from pursuing chip-related degrees, leading to a contraction in the domestic talent pipeline. Our conceptual model, which demonstrates how labor supply constraints and rising costs undermine the effectiveness of protectionism, provides a theoretical foundation for these findings.

Keywords: Economic nationalism, Chip, Tariff, Career, Semiconductor, H1-B, Labor

JEL Classification: F16, J21, J23, O3, L1, G15