Will Trade Deal Bring Back Millions of Jobs Lost to China?

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There is a widely held belief that as American companies turned to inexpensive manufacturing in China, millions of workers in the United States lost their jobs. This was particularly true after China became part of the World Trade Organization. New research shows those jobs will never return to U.S. shores.

The trade deficit is a proxy for why 3.7 million jobs were lost to China since it joined the WTO in 2001. The Economic Policy Institute reports that the job loss topped a million in 2005. It rose above 2 million in 2008 and 3 million in 2015.

Theoretically, if China’s trade deficit with the United States shrinks, as it should under the new trade agreement, some of those jobs should return to America. However, much of the deficit is not due to goods and services. The Economic Policy Institute explained the reasons for the trade deficit: “The single most important cause of growing trade deficits with China is its history of currency manipulation and dollar misalignment that has persisted for more than two decades.” The new trade agreement has no provision to eliminate these problems.

Job growth in the United States has been so strong since the Great Recession that jobs lost to China may not be important to the economy, as unemployment has dropped to a five-decade low of 3.5%. Some have argued that the jobs lost to China were high-paid blue-collar jobs with strong benefits. There is no definitive proof that this is true. The job additions to the economy in the past 10 years cover a wide swath of industries.

Will the lost jobs come back? It may not matter. Because unemployment is so low, some employers are finding it hard to get employees. The economy has been strong enough to handle the Chinese job problem, and then some.



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