In Focus: Reforming the Imbalanced Trade Relationship with China
Unfair trade has cost America millions of jobs, and the Phase 1 deal with China won’t help.
Q1 2020
American workers have been hammered for nearly two decades by Chinese imports. Economists call it “the China shock.” In fact, the country lost 3.7 million jobs to the Chinese trade deficit between 2001 and 2018. It was felt everywhere — in every state and every congressional district in the country.
President 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 last month alone. Manufacturing as a percentage of GDP is 11 percent, 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, but 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 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, and reached nearly $420 billion in 2018.
China must address the fundamental issues that give it an unfair trade advantage, especially the enormous subsidies it gives its industries. 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 Bush and Obama administrations 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 these negotiations more successful, our nation should also use its economic leverage — including tariffs — 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 — especially the enormous subsidies it gives its industries.
Those fundamentals remain, and that means the forgotten men and women Trump often talks about were forgotten again in that deal. The President says that won’t happen in “Phase 2.” The president we elect in November — Trump or otherwise — must see that it doesn’t.
It’s important that we make things in this country. Being able to continue doing so means we must reform our deeply unbalanced trade relationship with China. And real reform means fixing the fundamentals.
Project Announcements
Alltech Expands Jessamine County, Kentucky, Manufacturing Operations
07/30/2025
Liatris Expands Rockville, Maryland, Manufacturing Operations
07/30/2025
China-Based Eco King Solutions Plans Robbinsville, North Carolina, Production Operations
07/30/2025
Hood Container Upgrades West Feliciana Parish, Louisiana, Operations
07/29/2025
MR6 Tech Services Plans Huguley, Alabama, Manufacturing Operations
07/29/2025
Adient Plans Normal, Illinois, Production Operations
07/29/2025
Most Read
-
20th Annual Area Development Gold and Silver Shovel Awards
Q2 2025
-
In Focus: AI Is Changing Incentives Math
Q2 2025
-
Optimizing Your Rail-Served Transportation Network: Strategy Before Steel
Q2 2025
-
How to Choose the Right Site for Your Factory in 2025’s Volatile Landscape
Q2 2025
-
From Silicon to Server: Mapping the Data Center Supply Chain
Q2 2025
-
Tariffs, Talent, and U.S. Expansion
Q3 2025
-
First Person: David Robey, Co-CEO of QTS Data Centers
Q2 2025