An 18-year decline in American manufacturing may be drawing to a close, a result of tougher trade stances by the Trump Administration and its domestic tax policy.
Echoing a campaign theme, The President recently told reporters that,
“China has taken hundreds of billions of dollars a year from the United States. […] I explained to President Xi we can’t do that anymore…”
The administration has consistently stated that Beijing reduce its $375 billion merchandise trade surplus by least $200 billion within the next two years, and has threatened to impose $150 billion in tariffs if an agreement is not reached.
The favorable response to Trump’s moves have come from sources not generally noted for agreeing with GOP leaders, including AFL-CIO President Richard Trumka, who has often complained of Beijing’s unfair practices and the impact they have on American workers and their families.
In response to Trump’s demands, China has agreed to purchase more American products and services, although total amounts and other details have not been agreed upon, and many difficulties remain.
The history of American concessions to China that substantially harmed American businesses and workers has substantial tie-ins to the Clinton Administration, which was enmeshed in serious related scandals, largely underreported by the press. The (Bill) Clinton campaign was illegally the recipient of funds from China, and the Clinton Administration provided highly questionable technological and economic benefits to Beijing, (including the sale of Cray supercomputers despite significant protests from U.S. security personnel) and legislation normalizing trade relations, prompting significant protests from labor unions.
Those objecting to the Clinton concessions have been proven correct. China has leapfrogged decades of high tech development, particularly in its military, thanks to the technology transfer.
Perhaps no single act has resulted in more danger to the United States than the Clinton Administration’s approval of the export of supercomputers to China.
Despite promises to the contrary, China has not abided by reasonable trade practices following normalization of commercial relations. Its resulting domination of several industries have resulted in decimating American industrial production and the loss of vast numbers of manufacturing jobs. U.S. News reports that within the first 13 years since normalization, 3.2 million American factory jobs were lost.
Observers on both sides of the political spectrum have noted that normalizing trade with China turned that nation into an industrial giant while devastating both U.S. manufacturing enterprises and the workers they employ. That isn’t opinion, that’s a clear fact. It plays a key role in the accelerating descent of the American middle class, which became dominant in the 20th century due in large part to well-paying factory jobs.
The Huffington Post’s Jane White explains that the major beneficiary of Clinton’s policy “were […] Chinese factory owners and U.S. banks and the biggest losers were blue collar workers. Mitt Romney may have run a company that outsourced jobs but Clinton ran a country that did….”
The fact is, U.S. manufacturing declined sharply following China’s entry into the World Trade Organization. Consider the numbers in the years immediately following that event: from 2001 to 2009, America lost 42,400 factories. Manufacturing employment was reduced by 32%, representing 11.7 million jobs.
The tide may be turning. According to the Federal Reserve,
“Industrial production rose 0.7 percent in April for its third consecutive monthly increase…The indexes for mining and utilities moved up 1.1 percent and 1.9 percent, respectively. At 107.3 percent of its 2012 average, total industrial production in April was 3.5 percent higher than it was a year earlier.”
A CNBC report found that the manufacturing industry has added roughly 293,000 jobs since President Trump’s election, according to the Department of Labor https://www.dol.gov/ data. Overall, the unemployment rate is 3.9%, the lowest since 2000—just before Clinton’s giveaway to China.
Frank Vernuccio serves as editor-in-chief of the New York Analysis of Policy and Government.