Evolving trade dynamics: Global imports and their role in supporting US jobs
Published 27 August 2024
For over a decade, US politics has blamed global trade for job losses, but data shows the US economy has recovered from the "China Shock," become more resilient, and now benefits from imports. Our partners at the Association of Foreign Press Correspondents USA interviewed experts from Georgetown University’s Lab for Globalization and Shared Prosperity on why trade was miscast as a villain in US political narrative.
To dig deeper into the debate on whether trade causes job losses, AFPC interviewed Georgetown University's J. Bradford Jensen, Nita Rudra, and Niccolò Bonifai, experts from the Lab for Globalization and Shared Prosperity and co-authors of the report Is Trade Really Toxic? How Imports Support American Jobs, published by the Foundation in April.
J. Bradford Jensen is the McCrane/Shaker Chair of International Business at Georgetown University and director of the Izmirlian Program in Business and Global Affairs. Nita Rudra is a Professor in the Department of Government and McDonough School of Business, and Niccolò Bonifai is a Ph.D. candidate at Georgetown University. The discussion was moderated by Patrícia Vasconcellos, White House correspondent for Brazil’s SBT network.
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A key topic of discussion was the "China Shock," which refers to the significant influx of Chinese imports in the early 2000s that initially caused a sharp decline in United States manufacturing jobs. However, its impact has waned over the past decade, even before the US-China trade war began in 2016. Interestingly, imports from other developing countries like Brazil, India, and Mexico have positively impacted US manufacturing, supporting nearly half a million jobs between 2011 and 2019.
The panelists emphasized the need to reassess protectionist policies, which may no longer effectively address today’s economic realities. Instead, they suggested that US policymakers should shift their focus to enhancing the country’s comparative advantage in the services sector, such as software, legal, and financial services, to drive economic growth.
Another key point of discussion was the widening income gap in the US, a trend that has become a major concern for policymakers across the political spectrum. While inequality has always been high in the US, the decline in upward mobility is a new and troubling development. Globalization and trade, particularly with China, are often blamed for these economic disparities, but the discussion highlighted that many affected US industries have rebounded due to technological advancements and a shift to more capital- and skill-intensive manufacturing. In fact, imports, rather than being solely a threat to jobs, support US manufacturing by providing essential, cost-effective intermediate goods.
The panel also addressed the recent politicization of trade, recommending a more balanced approach to globalization that captures its benefits while mitigating adverse effects on specific industries and communities. To remain competitive in today’s global economy, the US must leverage its strengths in skills, capital, and intellectual property, support globalization, and enhance education and skills development. They cautioned that moving away from open trade could have negative repercussions globally, undermining the very system the US helped establish after World War II.
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