Trade Deficit with China Has Cost 2.8 Million U.S. Jobs Over Past Decade, New Study Finds

Tue, 09/20/2011

Manufacturing Hit Hardest with More Than 1.9 Million Jobs Lost

AAM Urges Immediate Action to Curb China’s Currency Manipulation

VIEW: Interactive map of jobs lost throughout the U.S.

Washington, D.C. September 20, 2011.  A staggering 2.8 million jobs, largely in manufacturing, have been lost as a result of the growing U.S. trade deficit with China since that country’s entry into the World Trade Organization (WTO) in 2001, according to a study released today by the Economic Policy Institute (EPI).

The growing U.S. trade deficit with China has cost jobs in every one of the nation’s congressional districts, the study reported, including the District of Columbia and Puerto Rico. Between 2001 and 2010, the computer and electronic parts industry was hit the hardest, as more than 909,400 jobs were displaced. The rapidly growing number of imports of computer and electronic parts, including semiconductors and audio-video equipment, accounted for more than 44 percent of the $194 billion increase in the U.S. trade deficit with China during that time.

The report, written by EPI’s Director of Trade and Manufacturing Policy Research Robert E. Scott, cites illegal currency manipulation as a major cause of the rapidly growing U.S. trade deficit with China. Unlike other currencies, the Chinese yuan does not fluctuate freely against the dollar, but is artificially pegged in order to boost China’s exports.

“This report offers conclusive evidence that immediate action by the Administration is needed to curb China’s currency manipulation, which, along with China’s blatant trade violations, are having the same devastating impact on high-tech production that they’ve already had on the nation’s longstanding industrial base,” said Scott Paul, executive director of the Alliance for American Manufacturing (AAM), a partnership of America’s leading manufacturers and the United Steelworkers union.

“And if President Obama won’t name China a currency manipulator,” Paul said, “then Congress will have no choice but to pass legislation that will hold them accountable.

“We urgently need a national strategy for restoring America’s global leadership in manufacturing,” he added. “Challenging China’s currency manipulation would be an important first step toward developing such a strategy.  It would not only cut unemployment, it would result in a much-needed increase in federal revenue.”

The 10 states that suffered the biggest net losses were California (454,600 jobs), Texas (232,800), New York (161,400), Illinois (118,200), Florida (114,400), North Carolina (107,800), Pennsylvania (106,900), Ohio (103,500), Massachusetts (88,600) and Georgia (87,700). These losses comprise more than 2.2 percent of total employment.

“Global trade in advanced technology products—often discussed as a source of comparative advantage for the United States—is instead dominated by China,” the report concludes.

A total of 453,100 jobs were lost or displaced from 2008 to 2010 alone—even though imports from China and the rest of world collapsed in 2009 during the height of the global financial crisis. In fact, the report notes the U.S. trade deficit with China increased $8 billion during the great recession, despite a collapse in world trade at that time.

“The United States urgently needs more manufacturing jobs to put people back to work, but our out-of-control trade deficit with China makes that impossible,” said Paul. “Reducing our trade deficit and stopping China's unfair trade practices will grow jobs, lower our trade deficit and put the U.S. on a more sound fiscal footing.”

The report cited other industrial sectors hit hard due to the growth in the trade deficit with China between 2001 and 2010, including apparel and accessories (178,700 jobs), textile fabrics and products (92,300), fabricated metal products (123,900), plastic and rubber products (62,000), motor vehicles and parts (49,300), and miscellaneous manufactured goods (119,700).

China’s currency manipulation, state-owned enterprises, heavy industrial subsidies, intellectual property theft and piracy, indigenous innovation policies, rare earth mineral export restrictions and other trade-distorting practices have caused China’s share of the total U.S. non-oil goods trade deficit to soar from 69.6 percent in 2008 to 78.3 percent in 2010.

“Unless China raises the real value of the yuan by at least 28.5 percent and eliminates other trade distortions,” the report concludes, “the U.S. trade deficit and job losses will continue to grow rapidly.”

CLICK HERE to read the full report.


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The Alliance for American Manufacturing (AAM) is a unique non-partisan, non-profit partnership forged to strengthen manufacturing in the U.S. AAM brings together a select group of America’s leading manufacturers and the United Steelworkers to promote creative policy solutions on priorities such as international trade, energy security, health care, retirement security, currency manipulation, and other issues of mutual concern.  For more information, please visit www.americanmanufacturing.org. 

@KeepitMadeinUSA on Twitter

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