Reference no: EM1346377

Study Sees Americans Bearing High Economic Cost of Imports as Labor Market Struggles to Adapt. For years, economists have told Americans worried that cheap Chinese imports will kill jobs that the benefits of trade with China far outweigh its costs.

WSJ's Justin Lahars reports that counties throughout the U.S. have seen employment declines that can be attributed to the importing of inexpensive goods from China. Reuters photo.

New research suggests the damage to the U.S. has been deeper than these economists have supposed. The study, conducted by a team of three economists, doesn't challenge the traditional view that trade is ultimately good for the economy. Workers who lose jobs do eventually find new work or retire, while the benefits from trade, such as lower prices, remain. The problem is the speed at which China has surged as an exporter, overwhelming the normal process of adaptation.

The study rated every U.S. county for its manufacturers' exposure to competition from China, and found that regions most exposed to China tended not only to lose more manufacturing jobs, but also to see overall employment decline. Areas with higher exposure also had larger increases in workers receiving unemployment insurance, food stamps and disability payments.

Competition from China's imports in sectors such as toys is taking more of an economic toll in the U.S. than thought. The authors calculate that the cost to the economy from the increased government payments amounts to one- to two-thirds of the gains from trade with China. In other words, a big portion of the ways trade with China has helped the U.S.-such as by providing inexpensive Chinese goods to consumers-has been wiped out. And that estimate doesn't include any economic losses experienced by people who lost their jobs.