A new study concludes that Donald Trump is right to blame China for millions of Americans losing their manufacturing jobs in the 2000s. Susan Houseman of the Upjohn Institute has found that the popular theory of new automation technology being the primary culprit for job losses among American manufactures is full of holes. The finding is similar to that of a study conducted by Massachusetts Institute of Technology professor David Autor, whose research found that two decades of trade deficits with China is the primary culprit in American manufacturing job losses precisely because it has contributed to undercutting technological development. In other words, the findings are the exact opposite of the widely assumed reason for job losses.
Houseman’s research finds, as MarketWatch explains, “The government for decades has vastly overestimated the growth of productivity in the American manufacturing sector. It’s been growing no faster, really, than the rest of the economy. What that means is, the adoption of technology is not the chief reason why millions of working-class Americans lost their jobs in a vast region stretching from the mouth of the Mississippi river to the shores of the Great Lakes. Nor was it inevitable.”
China developed its manufacturing often by appropriating innovation development from the U.S., all while taking full advantage of the strong dollar against the cheaper Chinese currency and raising tariffs against American imports. With that manufacturing base and capability established, U.S. companies then began moving operations to China. Setting up shop in China, innovation in America slowed while China saw it grow.
This is the economic challenge Trump recognized and campaigned to fix. Manufacturing needs to be brought back to the U.S. and leveling the playing field via challenging China with tariffs is one component of this effort.