The stock market is hitting record highs, and unemployment numbers are low. But many working families in Minnesota aren’t enjoying this economy. Their cost of living is up. Well-paying jobs that don’t require four-year degrees are scarce. And the future of work looks incredibly uncertain.
There are lots of explanations. But let’s focus on one that President Donald Trump talks about a lot: China.
American workers have been hammered for nearly two decades by Chinese imports. Economists call it “the China shock.” In fact, Minnesota has lost nearly 93,000 jobs to the Chinese trade deficit between 2001 and 2018. And Minnesotans aren’t alone: Every other state has lost jobs to the deficit, too.
Trump boasts of a “blue-collar boom,” but the numbers show only 26,000 factory jobs added nationally over the past year, and 12,000 shed in January alone. Manufacturing as a percentage of GDP is 11%, a post-World War II low. Meanwhile, the non-petroleum trade deficit in goods reached a high in 2019: $839.2 billion.
There are complex economic factors for the years-long malaise in U.S. manufacturing, and China plays a big part in them. Two decades ago, we were promised slightly cheaper stuff at stores like Walmart and a partner in the Chinese government that would follow the rules if we expanded trade. Instead, many Americans have been left economically insecure because imports have crowded out chunks of our manufacturing base. Our goods trade deficit with China went from $83 billion in 2001 to $103 billion in 2002 to $124 billion in 2003. It reached nearly $420 billion in 2018.
Import competition pushed down wages for America’s factory workers. And studies have documented that the toll of this import shock begins with unemployment and often ends with “deaths of despair.”
The administrations of Presidents George W. Bush and Barack Obama relied on dialogue with China to turn this relationship around. They failed. President Trump promised a different approach; and while he has delivered that by going it alone and raising tariffs, he hasn’t laid out a clear endgame.
Many Democratic presidential candidates criticize Trump for his China trade policy, particularly the tariffs. But the tariffs aren’t the problem. Although we should work with allies to make negotiations more successful, our nation should also use its economic leverage to defend our workers and industries.
The problem is the result of Trump’s “trade war.” In January at the White House, the president claimed victory in the China “Phase 1” deal, surrounded by Wall Street executives clearly relieved that an uneasy truce had been reached. But this agreement doesn’t require China to address the fundamental issues that give it an unfair trade advantage and huge trade surpluses — especially the enormous subsidies it gives its industries.
Those fundamentals remain, and so factory jobs will stay under pressure and “the forgotten men and women” Trump has talked about are again left out. The president says they won’t be when he gets to Phase 2. The president we elect in November — whether Trump or someone else — must see that they aren’t.
It’s important that we make things in this country. To continue doing so we must reform our unbalanced trade with China. And real reform means fixing the fundamentals.
Meghan Hasse of Madison, Wisconsin, is the Minnesota field coordinator for the Alliance for American Manufacturing (americanmanufacturing.org). She wrote this for the News Tribune.