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News from EPI Growing Trade Deficit with China has Cost 3.2 Million U.S. Jobs Since 2001

Growth in the U.S. goods trade deficit with China between 2001 and 2013 eliminated or displaced 3.2 million U.S. jobs, according to China Trade, Outsourcing and Jobs, a new study from EPI Director of Trade and Manufacturing Policy Research Robert E. Scott and research assistant Will Kimball. Trade with China has caused job loss in all 50 states and the District of Columbia, including all but one congressional district. About two-thirds of jobs lost, or 2.4 million, were in manufacturing.

“Growing trade deficits with China have hurt American workers and decimated U.S. manufacturing,” said Scott. “If policymakers are serious about supporting manufacturing jobs, we must work to put an end to China’s unfair trade policies.”

Supporters of China’s entry into the World Trade Organization in 2001 claimed that the move would create jobs and increase U.S. exports to China. However, China has continued to engage in unfair trade practices—such as currency manipulation, Illegal industry subsidies, tariff and non-tariff barriers to imports, dumping, and the suppression of wages and labor rights—which have limited the growth of U.S. exports. Meanwhile, growth in outsourcing by multinational companies has created a flood of Chinese imports into the United States, leading to rapidly growing trade deficits and corresponding job loss. U.S. trade deficits with China have nearly quadrupled since 2001, reaching $324.2 billion in 2013.

“Currency manipulation by China is the single biggest contributor to growing U.S. trade deficits and the resulting job loss,” said Scott. “It’s time for Congress and the president to enact tough new policies to end currency manipulation by China and more than a dozen other nations that have adopted similar policies. Congress should pass pending legislation that would allow the Commerce Department to penalize currency manipulators, and the president should use existing authority to tax or offset currency manipulation by foreign governments.”

All 50 states and the District of Columbia lost jobs, with the biggest net losses occurring in California, Texas, New York, Illinois, Pennsylvania, North Carolina, Florida, Ohio, Massachusetts, and Georgia. In terms of percent of the total state employment the 10 hardest-hit states—ranging from 2.44 percent to 3.67 percent—were Oregon, California, New Hampshire, Minnesota, Massachusetts, North Carolina, Texas, Rhode Island, Vermont, and Idaho. The impact of the trade deficit with China is not limited to direct job losses. Competition with low-wage countries has driven down wages and reduced bargaining power for millions of workers throughout the U.S. economy.