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News from EPI The growing trade deficit with China cost 3.4 million U.S. jobs between 2001 and 2015

Growth in the U.S. goods trade deficit with China eliminated or displaced 3.4 million U.S. jobs between 2001 and 2015, EPI Director of Trade and Manufacturing Policy Research Robert E. Scott finds in Growth in U.S.–China trade deficit between 2001 and 2015 cost 3.4 million jobs. The trade deficit with China has more than quadrupled since the country’s entrance into the World Trade Organization (WTO), rising from $83 billion in 2001 to $367.2 billion in 2015. This rise has led to job losses in every state (and the District of Columbia) and congressional district.

Since 2001, China has routinely engaged in unfair trade practices including currency manipulation, illegal industry subsidies, tariff and non-tariff barriers to imports, dumping, and the suppression of wages and labor rights—all of which have limited the growth of U.S. exports. Meanwhile, 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.

“There are a number of steps that Congress and the president can take to reduce the trade deficit with China and jumpstart job creation at home,” said Scott. “We must continue to challenge China on unfair currency practices, excess production capacity, and illegal dumping. These issues should be front and center of any bilateral negotiations we have with China.”

Job losses have occurred throughout the country and in every industry, but were concentrated in manufacturing, including sectors in which the United States has traditionally held a competitive advantage. Nearly three-fourths of the jobs lost, or 2.6 million jobs, were in manufacturing. Meanwhile, Scott points out that the impact of the trade deficit with China is not limited to direct job losses. Competition with low-wage countries drives down wages and reduces bargaining power for millions of workers throughout the U.S. economy.

Scott suggests a number of policy responses to combat unfair trade practices and the growing trade deficit with China, including stepped-up enforcement of fair trade laws and treaty obligations, and a border-adjustable carbon fee on imports produced by energy-intensive industries. Meanwhile, Scott argues that WTO nations should continue to treat China as a nonmarket economy in fair trade enforcement, because granting China market-economy status would curb the ability to impose tariffs on dumped goods. Lastly, although China is not currently manipulating its currency, Scott writes that the United States should remain vigilant against unfair currency practices, and perhaps even consider negotiating new agreements to rebalance currencies and global trade.