MEMO: Growing Trade Deficit with China Results in Continued Job Losses in PA

Stephen Herzenberg |

To: Interested Parties

From: Stephen Herzenberg, executive director, Keystone Research Center, co-author of major Congressional Study on the first NAFTA and a negotiator of original NAFTA labor side agreement

Re: Growing trade deficit with China results in continued job losses in PA

All Hat and No Cattle on TradeU.S. Workers Lose 700,000 More Jobs Due to Growing China Trade Deficit Since 2016; PA Loses 137,300 Jobs, Including in Key NW and SE Congressional Districts
The Economic Policy Institute today released a report showing that trade with China continues to cost the U.S. jobs and that the number of jobs lost has continued to climb since 2016. The growing U.S. trade deficit with China since U.S. entry into the World Trade Organization (WTO) in 2001 cost the U.S. 3.7 million jobs in 2018 and 137,300 jobs in Pennsylvania, most of them in manufacturing, which still today pays workers without a four-year college degree more than other industries.
The new report includes estimates of job loss by Pennsylvania Congressional District (CD). (See the table and two maps.)
  • Five Pennsylvania CDs lost over 9,000 jobs, two in the northwest, one in the northeast corner of the state, and two in suburban Philadelphia.
  • All but two of Pennsylvania’s CDs lost 6,000 to 10,000 jobs.


The U.S. still lacks a fair trade policy with China. We’ve had a lot of sound and fury on trade with China and Mexico, but so far it has signified nothing in terms of the jobs and wages that matter to U.S. and Pennsylvania workers.

The EPI model examines job impacts of trade by subtracting the job opportunities lost to imports from those gained through exports. EPI finds that because imports from China have soared while exports to China have increased much less, the United States is losing jobs in manufacturing (in electronics and high tech, apparel, textiles, and a range of heavier durable goods industries) and missing opportunities to add jobs in manufacturing (in export industries including transportation equipment, a major NW PA sector, chemicals, and food and beverages, strong in SE PA).

Following are the key highlights of this report:

  • The growth of the U.S. trade deficit with China between 2001 and 2018 cost the U.S. 3.7 million jobs. Three-fourths (75.4%) of the jobs lost (2.8 million) were in manufacturing.
  • Trade deficits with China and resulting jobs losses continued to grow during the first two years of the Trump administration. The U.S. trade deficit with China rose from $347 billion in 2016 to $420 billion in 2018. U.S. jobs displaced by China trade deficits increased from nearly 3.0 million in 2016 to 3.7 million in 2018—a rise of more than 700,000 jobs.
  • The growing trade deficit with China has cost jobs in all 50 states and in every congressional district. Pennsylvania lost the seventh most jobs.
  • Surging imports of steel, aluminum, and other capital-intensive products threaten hundreds of thousands of jobs in key industries such as primary metals, machinery, and fabricated metal products, historically major sectors in Pennsylvania. These three sectors alone lost 372,700 jobs due to growing trade deficits with China between 2001 and 2018.
  • China is exporting goods to the U.S. through other countries even though the bilateral trade deficit with China has declined in 2019 (through November). The overall U.S. trade deficit in non-oil goods, which is dominated by trade in manufactured and farm products, has continued to increase, as has China’s overall balance of trade with the rest of the world.
  • Growing trade deficits are associated with wage losses, not just for manufacturing workers but for all workers economy-wide who don’t have a college degree.
  • Between 2001 and 2011 alone, growing trade deficits with China reduced the incomes of directly impacted workers by $37 billion per year, and in 2011 alone, growing competition with imports from China and other low wage-countries reduced the wages of all U.S. non-college graduates by a total of $180 billion. Most of that income was redistributed to corporations in the form of higher profits and to workers with college degrees at the very top of the income distribution through higher wages.

To get to trade that really benefits U.S. workers, we need more than posturing. Even the new trade agreement with Mexico is more hat than cattle. Automakers already meet new requirements for production in North America so there won’t be any shift of jobs to the U.S. And the labor provisions are too weak to begin the real process of harmonizing Mexican wages up that should have begun with the first NAFTA in 1994.