Donald Trump may be too blustery, but he's not wrong on this issue.
Trade played a big part in Thursday night’s GOP presidential debate.
Frontrunner Donald Trump told moderators on Thursday that “China is ripping us on trade, they’re devaluing their currency, and they’re killing our companies.”
Much of his trade rhetoric earned rebukes from his fellow candidates, and even the moderators themselves. But! His main points are pretty sound.
The goods trade deficit with China HAS caused U.S. job loss. According to the Economic Policy Institute, 3.2 million jobs lost from 2001-2013 can be attributed to that deficit, which continues to grow. In 2012 the goods trade deficit was $315 billion; in 2013 it was $318 billion, and in 2014 it was $343 billion. The final sum for 2015 is projected to be larger.
Currency manipulation HAS caused U.S. job loss. Many economists – including C Fred Bergsten of the Peterson Institute, a former chief economist at the International Monetary Fund, and no less a free-trader than Art Laffer – have all estimated that competitive currency devaluations have cost millions of American jobs.
There IS precedent for tariffs in response to unfair trade, and they are consistent with America’s WTO obligations. George W. Bush imposed steel tariffs in 2002 in response to a wave of “dumped” imports – meaning that they were priced well below market value and in ways meant to circumvent trade laws – that threatened the existence of the domestic steel industry. Ronald Reagan did the same on a number of occasions: First on the advice of the International Trade Commission to provide relief to domestic motorcycle manufacturers, and again to halt the dumping of underpriced Japanese-made consumer goods into the US market.
Unfair trade IS happening right now, and it has caused thousands of layoffs in the domestic steel industry. A surge in heavily subsidized steel imports from China is flooding the U.S. market. This dumping has idled mills and mines from Alabama to Minnesota, and more layoffs are expected in 2016. Meanwhile, China’s overcapacity problems persist.
- Manufacturing employment HAS NOT recovered from the jobs lost during the recession. Never mind President Obama’s boast of 900,000 manufacturing jobs created in the past six years: Manufacturing lost more than 2 million in the two years before that.
Donald Trump says lots of things, very loudly. But he's pretty much spot on when it comes to trade with China.