How a Thriving American Industry Faces Job Risks Amid Escalating Trade Wars – Insights from CNN Business

In the midst of the ongoing trade war, an important aspect of America’s economy is at risk: the service sector. Contrary to popular belief, it’s this sector—not manufacturing—that drives the largest part of the economy, boasting a significant trade surplus.

The U.S. trade imbalance has been widely discussed, with imports outpacing exports. Yet, the service sector stands out. We actually export more services than we import, allowing for a trade surplus with major partners like China and the European Union. In fact, this surplus reached $293 billion in 2024—up 25% since 2022.

Mark Zandi, chief economist at Moody’s Analytics, emphasizes the value of service jobs. These industries are vital for economic growth,” he states. “If other countries retaliate against our tariffs, they might target our strong service sector.” This retaliation could range from restricting American films to placing limits on U.S. banks operating abroad.

Historically, service jobs have been a cornerstone of the American economy. They represented 57% of private sector employment back in 1939—a number that has now skyrocketed to 84%. Meanwhile, manufacturing employment has plummeted to less than 10% today, largely due to automation and technological advancement.

Cardiff Garcia, an economist, notes that as countries develop and advance, the percentage of jobs in manufacturing naturally declines. “You can’t force an economy back into the past,” he remarks. This shift is evident even in the auto industry, where service roles at dealerships now outnumber those at manufacturing plants.

The implications of the trade war extend even further. Recent statistics from Tourism Economics predict a 9.4% drop in international visitors to the U.S. in 2025, which could mean a loss of $9 billion for the hospitality industry.

Public sentiment also plays a role. The Trump administration’s policies have reportedly shifted international travelers’ perceptions of the U.S. negatively, impacting tourism and related jobs. Delta Air Lines has noticed a decline in travel demand and is adjusting its workforce accordingly. “Fewer people are expected to travel,” said Delta CEO Ed Bastian, hinting at possible recession-like conditions ahead.

The service sector encompasses a broad range of industries—from restaurants and retail to healthcare and education. Economists warn that if the economy slows down due to tariff-induced turbulence, these sectors will feel the brunt of the impact, affecting countless American jobs. As these economic pressures mount, the importance of focusing on the needs of the service sector becomes more critical than ever.

The situation is complex, but the key takeaway is clear: maintaining the vitality of the service sector is essential to protect jobs and the economy as a whole. As we move forward, understanding this dynamic will be crucial for policymakers and businesses alike.

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