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News from EPI Growing U.S. trade deficit with China cost 2.7 million jobs between 2001 and 2011

For Immediate Release: Thursday, August 23, 2012
Contact: Phoebe Silag or Donte Donald, 202-775-8810

Growing U.S. trade deficit with China cost 2.7 million jobs between 2001 and 2011

The U.S. trade deficit with China eliminated or displaced more than 2.7 million U.S. jobs between 2001 and 2011, a new Economic Policy Institute briefing paper finds. The China toll: Growing U.S. trade deficit with China cost more than 2.7 million jobs between 2001 and 2011, with job losses in every state, by EPI’s Director of Trade and Manufacturing Policy Research Robert Scott, finds that jobs were lost or displaced in all 50 states, the District of Columbia and Puerto Rico as a result of the growing U.S.-China trade deficit.

Over 2.1 million, or 76.9 percent, of the jobs eliminated or displaced were in manufacturing. These lost manufacturing jobs account for more than half of all U.S. manufacturing jobs eliminated or displaced between 2001 and 2011. The trade deficit in the computer and electronic products industry grew the most among manufacturing industries, eliminating or displacing almost 1.1 million jobs as a result.

“China is moving rapidly upstream into computers and other advanced technology products, which threatens core, high-tech manufacturing industries that still remain in the United States,” Scott said.

The states with the biggest net losses, in terms of the total number of jobs eliminated or displaced, were California (474,700 jobs), Texas (239, 600), New York (158,800), Illinois (113,700), North Carolina (110,300), Florida (106,100), Pennsylvania (101,200), Ohio (95,900), Massachusetts (92,700) and Georgia (87,300).  In 12 states, the jobs lost or displaced equaled or exceeded 2.2% of total employment: New Hampshire (2.94 percent of total state employment), California (2.87 percent), Massachusetts (2.86 percent), Oregon (2.85 percent), North Carolina (2.67 percent), Minnesota (2.66 percent), Idaho (2.65 percent), Vermont (2.43 percent), Colorado (2.38 percent), Texas (2.26 percent), Rhode Island (2.24 percent) and Alabama (2.20 percent).

Hard-hit sectors in manufacturing other than computer and electronic parts include apparel and accessories, textile mills and textile product mills, fabricated metal products, plastic and rubber products, and motor vehicles and parts. Service industries, including administrative, support and waste management services, experienced significant job displacement as a result of eliminated or displaced manufacturing jobs.

“Increases in U.S. 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,” Scott said. “Thus, growing trade deficits cost U.S. jobs.”

Currency manipulation by the Chinese government has exacerbated the U.S.-China trade deficit. China’s productivity has soared, but because China has pegged its currency to the U.S. dollar instead of allowing it to fluctuate freely, the yuan has not increased in value. Thus, U.S. goods are less competitive in China and in countries where U.S. exports compete with those from China.

“China’s currency policies have contributed to the dramatic growth of the U.S.-China trade deficit and the loss of 2.7 million U.S. jobs since China entered the WTO in 2001,” said Scott.