Economists say the U.S. manufacturing decline in recent decades was not mainly about free trade, but about the pace of change without time to adjust.When Congress voted to normalize trade relations with China at the beginning of this century, U.S. manufacturers were anticipating an influx of cheap goods into the country. However, what they got was a deluge. Imports from China increased by almost three times from 1999 to 2005, causing American factories to struggle to compete with their higher wages and stricter safety standards. This phenomenon, known as the “China shock,” resulted in the loss of millions of jobs and left lasting scars on communities across the country.
President Trump and his supporters view these job losses as evidence of the damage caused by decades of U.S. trade policies, which he promises to reverse through his tariffs. On Wednesday, he announced further increases in tariffs on imports from China, while also suspending steep tariffs on other trading partners.
However, few economists believe that bringing back manufacturing jobs on a large scale is a viable solution, and even fewer believe that tariffs are an effective tool for doing so. Instead, economists who have studied the issue argue that Mr. Trump misunderstands the true nature of the China shock. They believe that the real lesson of this episode is not about trade, but rather about the toll that rapid economic changes can take on workers and communities. By failing to understand this, Mr. Trump risks repeating the mistakes he claims he is trying to correct.
Scott Lincicome, a trade economist at the Cato Institute, a libertarian research organization, explains, “For the last 20 years we’ve been hearing about the China shock and how brutal it was and how people can’t adjust. And finally, after most places have moved on, now we’re shocking them again.”
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