Tariffs and the Gender Gap in Entrepreneurship: Evidence from the 2018–2019 U.S. Trade War with Implications for the 2025 Tariff Escalation

This study examines whether the 2018–2019 U.S. tariff increases under Sections 232 and 301 disproportionately affected women-owned businesses compared to men-owned businesses. While tariffs are designed as gender-neutral instruments of trade policy, women-owned firms are systematically smaller, younger, and more resource-constrained, suggesting they may be more vulnerable to input cost shocks. The aim of this research is to quantify the differential impact of tariff exposure on women-owned employer firms and to assess whether tariffs suppressed a broader trend of growth in women's entrepreneurship. Using a continuous-treatment difference-in-differences design, we merge industry-level tariff exposure data from the U.S. International Trade Commission with gender-disaggregated firm data from the U.S. Census Bureau's Annual Business Survey (2017–2023). The state-level panel comprises 6,640 observations across 18 sectors, 51 states, and five years, with sector, state, and year fixed effects and cluster-robust standard errors. Our results reveal that each one-percentage-point increase in effective tariff rate is associated with a 5.5% decline in the number of women-owned employer firms relative to men-owned firms (t = −2.11, p < 0.05). The effect is consistent across employment (−5.8%) and payroll (−4.8%) outcomes, persists through 2023 in event study specifications, and is robust to temporal restrictions and state-level GDP controls. Concurrently, women's entrepreneurship in non-exposed service sectors grew at more than twice the rate of men's (+7.1% vs. +3.0%), suggesting that tariffs suppressed a broader surge in women's business formation. These findings make a novel contribution by extending the analysis of gendered trade impacts into entrepreneurship, demonstrating that ostensibly gender-neutral trade policies produce asymmetric outcomes through differential firm-level vulnerability—a finding with urgent implications given the substantially larger 2025 tariff escalation.