New study finds trade with China cut U.S. manufacturing jobs by roughly 30%

Posted by scapozzola on 01/07/2013

Last summer, the Economic Policy Institute (EPI) released a study that found more than 2.7 million American jobs—2.1 million of them in manufacturing—have been lost or eliminated since 2001, due to the United States’ mushrooming trade deficit with China.

While that report made an impact during the fall presidential campaign, a new study released by the Federal Reserve’s Justin Pierce and Yale’s Peter Schott reports on the sharp drop in U.S. manufacturing employment after 2001 resulting from the U.S. granting permanent normal trade relations (PNTR) to China in late 2000.

As Dylan Matthews reports in the Washington Post's Wonkblog, Pierce and Schott argue that employment in the U.S. manufacturing sector was 29.6 percent lower than it otherwise would have been absent PNTR.  In fact, much of the negative effect on manufacturing employment came not from actual job losses but from the absence of job growth that would have been expected without the agreement.

Matthews concludes: "...it does suggest that trade liberalization, and with China in particular, is a big reason for the decline of American manufacturing jobs."

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