According to the Economic Policy Institute, the growing US trade deficit with China has resulted in 2.7 million US job losses over ten years -- Image: Economic Policy Institute

New Report: Growing US Trade Deficit with China Results in 2.7 Million Job Losses


A briefing paper released August 23 by the Economic Policy Institute entitled The China Toll asserts that the US trade deficit with China has resulted in the elimination or displacement of more than 2.7 million US jobs over the course of ten years across all 50 states, the District of Columbia and Puerto Rico. The report focuses on the ten years since China’s entry into the World Trade Organization in 2001.

Robert E. Scott, EPI’s Director of Trade and Manufacturing Policy Research and author of the report, blames increased cheap imports from China fueled by the artificial value of the Chinese currency, the Renminbi. Scott explained that: “Increases in US exports support job creation in the United States, but increases in imports result in job losses—by destroying existing jobs and preventing new job creation—as imports displace goods that otherwise would have been made in the United States by domestic workers. Thus, growing trade deficits cost US jobs. [In addition] China’s currency policies have contributed to the dramatic growth of the US-China trade deficit and the loss of 2.7 million US jobs since China entered the WTO in 2001.”

California, Texas, New York and Illinois experienced the largest number of actual job losses, with North Carolina, Minnesota, Vermont, and Colorado among the top twelve states that had jobs lost or displaced equaling or exceeding 2.2 percent of total state employment. The Alliance for American Manufacturing has an interactive map showing individual state and congressional district employment retrenchments highlighted in the report.

The vast majority of job losses, over 2.1 million, were in the manufacturing sector which according to the report represents more than half of all US manufacturing jobs lost or displaced between 2001 and 2011. The computer and electronic products industry, in particular, was severely impacted, with 39 percent of the total 2.7 million jobs eliminated or displaced coming from this sector. As highlighted in a previous posting, the United States has lost over one-quarter of its high-tech manufacturing jobs in the past decade according to a 2012 report by the US National Science Board.

Other hard hit sectors include apparel, textiles, and metal, plastic and rubber products. Manufacturing service support industries including administrative and support and waste management services also experienced increased unemployment as a result of these retrenchments. In addition, the report found that financial compensation and bargaining power for low-educated US workers were negatively impacted as a result of competition from Chinese low-wage workers.

Reaction to the report was mixed from business and labor organizations. The US Chamber of Commerce released a press statement vehemently contesting the findings of the report. Myron Brilliant, vice president of the US Chamber of Commerce Asia division, stated that “some of our friends in Washington need to get their facts straight. This study neglects the most important and largest cause of job losses in the US: gains in labor productivity because of technological innovation." On the labor side, the AFL-CIO endorsed the report’s findings with its own website posting.