Job losses from growing U.S. trade deficit
A report released by the Economic Policy Institute (EPI) mentions that Arizona lost an estimated 66,000 jobs to China in the 17-year period between 2001 and 2018.
The report, “Growing China trade deficit cost 3.7 million American jobs between 2001 and 2018,” estimates that the impact of the Arizona job losses was approximately 2.2 percent of the total state workforce during that period.
Contributing factors
The EPI report blames a massive U.S. trade deficit with China for the loss of the jobs. According the Census Bureau, as of November 2019, U.S. exports to China totaled approximately $97.8 billion. During the same period, the nation’s imports from China were $418.6 billion, leaving a trade deficit of $320.8 billion through last November.
Another key factor in the 2001-2018 U.S.-to-China job flow, which totaled 3.7 jobs nationally, was on December 11, 2001. On that date, China joined the World Trade Organization (WTO), an event that started a rapid expansion of trans-Pacific trade.
And instead of following WTO rules that would have increased foreign access to its domestic markets, China has been able to thwart the rules by manipulating its currency and subsidizing key industries, allowing them to suppress wages and product prices.
Conclusion
The EPI report concludes that, despite rhetoric and tariffs, the U.S.-China trade imbalance increased between 2016 and 2018, as the two nations were “locked in destructive, interdependent economic cycles.”
This situation is complicated by the massive foreign debt incurred by the U.S., which has resulted in a loss of export capacity and a “fragile macroeconomic environment.”
However, the authors of the report believe that a “rebalancing” of the flows of capital and trade between the two nations could result in gains for both countries.
Image by Gino Crescoli – AbsolutVision