^{Trump’s Tariff Tsunami: New Trade War Shake-Up Targets 100 Countries | The Islamabad Telegraph}

The Overlooked Pillar of the U.S. Economy

While manufacturing often dominates discussions on trade, it's the service sector that quietly powers the American economy. In 2024, the U.S. services trade surplus reached $293 billion, marking a 5% increase from the previous year and a 25% rise since 2022 . This surplus spans a diverse range of industries, including finance, education, healthcare, and technology.​

Services now account for approximately 84% of private-sector employment in the U.S., a significant jump from 57% in 1939 . In contrast, manufacturing jobs have dwindled to less than 10% of private-sector employment, a decline influenced more by automation and technological advancements than by trade policies.​

Tariffs: A Double-Edged Sword

The current administration's emphasis on tariffs aims to rejuvenate domestic manufacturing. However, these measures risk unintended consequences for the service sector. Retaliatory actions from trade partners could target U.S. services, leading to reduced market access and increased regulatory hurdles.

For instance, China, a significant market for U.S. films, is contemplating restrictions on American movie imports in response to heightened tariffs . Similarly, the European Union is considering imposing digital levies on U.S. tech companies and tightening regulations on American financial institutions operating within its borders.​

The Ripple Effect on Service-Oriented Jobs

The service sector's vastness means that trade tensions can have widespread implications:​

• Automotive Services: While manufacturing plants garner attention, dealerships employ a larger workforce. Approximately 1.3 million individuals work at U.S. car dealerships, compared to 1 million in manufacturing roles. Tariffs on imported vehicles could reduce inventory, leading to job losses in sales and maintenance.​
• Education: International students contribute significantly to the U.S. economy, both through tuition and living expenses. With about 1.1 million international students enrolled, they represent 7% of the student population. However, stricter visa policies and a less welcoming environment have led to a decline in new enrollments, affecting university revenues and local economies.​
• Tourism: The U.S. has seen a downturn in international visitors, with a projected 9.4% decline in 2025. This decrease translates to an estimated $9 billion loss in revenue for hotels, restaurants, and attractions .​

Navigating the Path Forward

While bolstering manufacturing is a commendable goal, it's crucial to recognize and support the service sector's pivotal role in the U.S. economy. Policymakers must strike a balance, ensuring that efforts to protect one sector don't inadvertently harm another. Investing in workforce development, fostering international collaborations, and maintaining open channels for service exports will be essential in sustaining economic growth amidst evolving global trade dynamics.​

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