Trade uncertainty between the EU and the US – driven by the announcement of new tariffs and a volatile global economy – has raised concerns for EU businesses, workers, and policymakers. This column presents evidence on the sectoral and regional exposure of EU labour markets to exports to the US. In manufacturing – the sector with the highest number of jobs supported by exports to the US – the degree of trade exposure varies considerably across regions. Understanding these sectoral and regional differences is essential for developing effective, targeted responses to future trade disruptions.
Recent months have seen a series of US tariff announcements targeting European exports, including aluminium, steel, and cars. At the same time, global economic conditions have become more challenging. Slowing global growth and inflationary pressures although receding have compounded challenges faced by EU exporters. Exchange rate volatility, supply chain disruptions, and shifting consumer demand patterns further complicate the outlook.
This has created more uncertainty for EU businesses and workers. Following the tariff announcements, the International Monetary Fund and the European Commission have already lowered their 2025 growth forecasts (IMF 2025, European Commission 2025a). Sudden changes in the exchange rate and volatility in financial markets are also making it harder for companies to plan and invest. Recent studies have modelled different tariff and retaliation scenarios and also assessed the different channels through which tariffs impact economies (e.g. Cerdeiro et al. 2025).
While much attention has focused on the effects of tariffs on trade flows and growth, less research has explored how these changes could affect jobs. Tariffs can impact EU employment by raising the cost of EU goods in the US market, eroding the EU’s price competitiveness with potentially adverse consequences for demand of European goods. This, in turn, can reduce export-linked employment in the EU. The scale of the impact depends on several factors.
First, if EU companies can redirect exports elsewhere, including within the EU, the negative impact on employment can be reduced. Trade diversion was a major mitigating factor, for example, for Chinese exporters after the US tariff increases in 2018 (ECB 2025). However, the scope and speed of such reallocation of exports, and consequent labour performance, would depend on the degree of sectoral heterogeneity in global demand patterns and on competition from countries facing similar trade barriers (Corsello et al. 2025).
Second, the impact of tariffs on EU employment is affected by the degree to which EU firms and US retailers are able or willing to pass on the higher costs of tariffs to their consumers, which would then affect overall exports. Cavallo et al. (2021) found that earlier US tariffs on Chinese imports introduced in 2018 and 2019 were almost entirely passed through to US consumers. For the EU, the extent of this pass-through depends on how easily EU goods can be substituted with those from other countries. This depends critically on the elasticity of substitution between EU goods and those from other trading partners.
Third, in some cases, especially if other countries face higher tariffs, EU exporters may actually gain market share. For instance, Chen et al. (2025) show how Mexican export industries increased employment and wages after the US imposed tariffs on China in 2018.
Beyond these direct trade effects, rising tariffs may also exert downward pressure on EU employment through broader macroeconomic channels. A prolonged deterioration in global trade relations may depress global investment and growth more broadly, indirectly affecting employment across Europe.
EU employment exposure to US exports
Understanding risks to the EU labour market from shifts in trade flows requires an in-depth look at current trade patterns with the US, taking into account how jobs supporting US exports are distributed across sectors and regions. As of 2022, about 5.2 million EU jobs (2.4% of total employment) were supported by exports to the US. This has been calculated using the European Commission’s Macroeconomic Globalisation Indicators,which estimate export-dependent jobs by sector and country incorporating intra-EU linkages across the value chain. Exposure varies considerably across EU countries: 6.7% of all jobs in Ireland are linked to US exports, compared to just to 1% in Croatia (Figure 1).
Manufacturing plays a central role in the EU’s trade with the US, accounting for nearly one-third of all US export-supported jobs in the EU. In 2022, around 1.61 million jobs, representing 31% of export-dependent employment, were in manufacturing. Other important sectors include wholesale and retail trade (14%), professional, scientific and technical activities (12%), and administrative and support services (10%) (Figure 1). As recent tariffs target goods rather than services, the following section focuses on employment linked to exports of goods to the US.
Figure 1 Share of jobs dependent on exports to the US of goods and services, split by sector, 2022 (% of total jobs)
Note: Includes most recent FIGARO data (2022).
Source: European Commission calculations based on national accounts data and FIGARO tables
In 2022, 1.54 million EU manufacturing jobs, or 5.1% of the sector, depended on US goods exports. Within manufacturing, trade exposure is far from uniform. Certain subsectors display markedly higher exposure (Figure 2). In the pharmaceuticals industry, nearly 14% of jobs depended on US demand, making it the most exposed subsector. Similarly, machinery and equipment (7.6%) and basic metals (7.1%) also show relatively high levels of exposure.
Figure 2 Job exposure to US goods exports by manufacturing sector, EU, 2022
Note: Only includes jobs supported by exports of goods and wholesale and retail trade, i.e. NACE sectors A-G.
Source: European Commission calculations based on national accounts data and FIGARO tables
Regional differences in export-linked employment
To assess the US trade exposure of regional labour markets, we calculated the share of employment in each sector and region that is supported by exports to the US, expressed relative to total regional employment. This measure is then adjusted by the (national) share of sectoral employment supported by US exports, thus accounting for differences in national sectoral trade flows.
Figure 3 Regional employment exposure to goods exports to the US located in manufacturing, weighted by total regional employment, 2024
Note: Only includes jobs supported by exports of goods and wholesale and retail trade, i.e. NACE sectors A-G. FIGARO data is from 2022, while LFS uses 2024.
Source: European Commission calculations based on LFS and FIGARO tables
The share of employment in manufacturing supported by US exports ranges from as low as 0.04% to as high as 3.1% of total employment across EU regions (Figure 3). The most exposed regions are concentrated in Ireland and Northern Italy (notably Veneto, Marche, Emilie-Romagna, and Piemonte), which together account for seven of the ten most trade-exposed regions. Other high-exposure areas include parts of Germany, Czechia, Austria and Hungary (for example, Tübingen, Közép-Dunántúl, and Voralberg). These regions are deeply connected to global supply chains and have a higher share of manufacturing employment—making them more vulnerable to trade disruptions. The European Commission (2025b) further explores the US trade exposure of different manufacturing sectors by region, revealing pronounced variations across regions depending on their sectoral specialisation.
This analysis shows that about 5.2 million jobs in the EU support exports to the US. Changes in US trade policy could disproportionally affect some sectors and regions more than others. In particular, the manufacturing sector (i.e. pharmaceuticals, and machinery and equipment) would be most affected as well as certain regions in Ireland, Northern Italy, and Germany.
Source : VOXeu
