PE: Shocking News! Trade with China Supports U.S. Jobs

Amy Payne

September 18, 2012 

The presidential debate yesterday moved to trade with China, with the usual rhetorical suspects—including “outsourcing” and the “trade deficit”—taking center stage. President Obama announced that his Administration had filed a complaint against China with the World Trade Organization. But a groundbreaking new report from Heritage proves that importing goods from China supports American jobs here at home, completely turning political wisdom on its head.


Importing clothes and toys from China helps to support more than half a million American jobs, the report reveals—in stark contrast to claims that trade with China costs jobs.
Heritage’s Derek Scissors, Charlotte Espinoza, and Ambassador Terry Miller analyzed data in a completely new way, showing that “the value added to imports from the time of entry into the country to the time of final purchase by consumers can be used to estimate how many jobs are being supported by imports.”

When we import goods, Americans are employed in every stage of the chain that brings those goods into consumers’ hands, from unloading cargo at the port to ringing up a sale at the store counter. Imports support jobs in fields like transportation, wholesale, retail, construction, and finance.
Scissors, Espinoza, and Miller conclude:

The belief that more imports equals less employment at home is false. It follows directly that the idea that trade deficits lead to higher unemployment is also false. Concern over the size of the U.S. trade deficit, and particularly its impact on jobs, is based on a misconception of the way trade affects economic activity.

Trade with other countries does affect U.S. employment. In short, more trade promotes jobs. A greater flow of trade—both in and out of America—should be the goal, because both exports and imports support jobs. It doesn’t make sense to focus on whether imports or exports are larger (whether there is a trade “deficit” or “surplus”) when both are having a positive impact.
As the authors put it, “The idea that millions of American jobs have been lost to China relies on bad trade numbers, bad economics, and a completely fictional view of the world.”
This doesn’t even address all the important effects of imports—they also expand consumer choices and affect the economy in many other ways—but it corrects the wrong ideas about the overall impact of imports on jobs.
The policy implications of these findings are clear:

[E]xpanded economic activity due to trade in both directions adds jobs. Congress and the Administration should not be fooled by claims of jobs lost due to imports. The government can best bolster the U.S. economy, and increase employment, by moving away from protectionism and toward trade liberalization.

Trading with China doesn’t make the American economy a loser. On the contrary, following a policy of protectionism makes everyone a loser—including Americans in need of jobs.
Read the full report here.
Quick Hits:

• “Al Qaeda’s affiliate in North Africa urged Muslims in the region to kill U.S. government representatives,” according to a statement posted today.
• Ships from 30 countries are sweeping the Persian Gulf for mines in a warning to Iran.
• Following a series of insider attacks by Afghan forces against American troops and allies, the U.S. has temporarily suspended most joint operations with Afghan forces.
• After championing federal subsidies for U.S. automakers, the Obama Administration filed a complaint against China yesterday for subsidizing Chinese automakers.
• Nearly half of all Americans don’t pay income taxes, and according to The Heritage Foundation’s Index of Dependence on Government, most of that population receives federal benefits of some kind.