The growing US trade deficit with China has led to the loss of millions of jobs in America, according to a new study, with the country’s apparel industry one of those hit.
Growth in the bilateral trade deficit between the US and China from 2001 to 2017 has cost 3.4m US jobs, with over US$100bn added to the deficit since 2008, according to labour think tank the Economic Policy Institute in Washington DC.
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Researchers say the increase in deficit since the Great Recession in 2008 almost entirely explains why manufacturing employment has not fully recovered along with the rest of the economy.
Yet it adds: “The growing trade deficit with China isn’t just a post-recession phenomenon hitting manufacturing: it has cost the US millions of jobs throughout the economy since China entered the World Trade Organization (WTO) in 2001, a finding validated by numerous studies.”
The job losses were concentrated in the manufacturing sector, including industries in which the US had traditionally held a competitive advantage, because of the trade deficit.
“Because imports from China have soared while exports to China have increased much less, the United States is both losing jobs in manufacturing (in electronics and high tech, apparel, textiles, and a range of heavier durable goods industries) and missing opportunities to add jobs in manufacturing (in exporting industries such as transportation equipment, agricultural products, computer and electronic parts, chemicals, machinery, and food and beverages),” the report explains.
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By GlobalDataBetween 2001 and 2007, the US apparel industry imported US$20.7bn worth of goods and exported $0.1bn worth, with the trade deficit calculated at around $20.7bn. As a result, 169,000 jobs have been displaced – equal to 5% of the total – for the same period.
A district in Georgia and another in North Carolina were especially hard hit by trade-related job displacement in apparel and textiles, in addition to a variety of other manufacturing industries, including computer and electronic parts, and furniture.
More specifically, California’s 34th and 40th districts saw apparel industry jobs losses of 65.3% and 56.3%, compared with the national average of apparel industry job losses.
But as well as direct trade, researchers also pointed to ongoing concerns over China’s trade policies.
“China’s trade-distorting practices, aided by China’s currency manipulation and misalignment and its suppression of wages and labour rights, resulted in a flood of dumped and subsidised imports that greatly exceeded the growth of US exports to China,” they noted.
China is currently engaged in a trade war with the US, which most recently approved a 10% tariff on an additional US$200bn worth of goods from China, in a move the US fashion industry says will considerably disrupt the sector’s supply chain. On 1 January 2019, the tariffs will rise to 25%.
China has responded by imposing 5-10% tariffs on $60bn of US goods. Negotiations between the two countries to put an end to the trade war, however, have stalled.
