During the campaign the Republican nominee assailed the 1993 North American Free Trade Agreement with Mexico and Canada as costing tens of thousands of jobs and insisted he would take a tough line against international trade if elected president.
In a video released last week, Trump called the Trans-Pacific Partnership, a free-trade agreement between the United States and 11 other Pacific-rim countries, a “potential disaster for our country,” pledging instead to “negotiate fair bilateral trade deals that will bring jobs and industry back on to American shores.”
But economists worry that a major trade war could result from a reversal of U.S. trade policy, which could raise prices on consumer products such as cars, flat-screen TVs and home appliances, and also tip the economy into a recession that would throw people out of work.
“I understand it’s pandering to populist and progressive interest groups, but I hope we all enjoy the resulting recession,” deadpanned Edward Hill, a professor of economic development policy at the John Glenn College of Public Affairs at Ohio State University.
Mark Muro, a senior fellow and policy director at the Metropolitan Policy Program at the Brookings Institution in Washington, said “it is a cruel joke to tell workers who lost their job in manufacturing that if we make a few adjustments on some trade agreements, lots of jobs will be returned in manufacturing.”
“Both parties have somewhat romanticized the manufacturing economy and made out-sized promises for it,” Muro said. “Manufacturing is absolutely critical to American. It encompasses some of the most exciting innovation that we have, but it is simply not going to resemble your parents’ shop floor with 5,000 workers.”
Difficult path
Critics of NAFTA and the Pacific pact — such as Dean Baker, co-director of the Center for Economic and Policy Research in Washington — acknowledge it will be difficult for Trump to lure many jobs back.
“The path of trade over the past two decades has cost jobs and particularly in Ohio and other states like that,” Baker said. “Some number will come back. (But) the idea we’re going to get all those jobs back is unlikely.”
Trump defeated Democrat Hillary Clinton by winning Ohio, Pennsylvania, Michigan and Wisconsin, all of which saw manufacturing jobs swept away through a combination of automation, international trade competition, the strong dollar and high labor costs.
The Midwest in particular takes a dim view of the benefits from trade.
Nationally, network exit polls showed 38 percent of voters said trade creates jobs while 42 percent said it takes jobs away. But in Ohio 48 percent — or nearly half of all voters — said trade destroys jobs.
Trump took advantage, winning 69 percent of the anti-trade voters in Ohio and 58 percent in Michigan.
Millions of well-paying manufacturing jobs have vanished during the past 15 years, but economists sharply disagree on whether it is the fault of international trade or the rapid increases in productivity that allow American companies to produce more products with fewer workers.
There are roughly 12 million manufacturing jobs in the United States today compared to 19 million in 1979. Yet even as companies shed workers during the past three decades, U.S. industrial output has dramatically increased since 1979 and the country’s manufacturing output is second only to China and larger than the combined output of Germany and Japan.
Muro calculates it took 25 jobs in 1980 to produce $1 million in manufacturing output compared to just six jobs today. The U.S. Bureau of Labor Statistics projects manufacturing jobs will continue to decline during the next decade even as economy adds 10 million new jobs.
Ohio, often portrayed as the center of the Rust Belt composed of abandoned factories, has increased its gross domestic product measured in 2015 dollars from $480 billion in 1997 to $608 billion today.
“It’s automation and if we didn’t automate, the American consumer would vote with their feet and buy this stuff elsewhere,” said Hill. “If you want to bring back American manufacturing to the efficiencies and technologies of 1970, try it.”
Opposing views
Baker doesn’t buy the argument that automation rather than trade is responsible for the job losses. “We’ve had technology and productivity improvements forever,” he said, adding there was relatively little change in manufacturing jobs from 1970 through 2000.
But following China’s admission to the World Trade Organization and the full implementation of NAFTA, jobs began to vanish, Baker says. It is “extremely misleading” to say the job loss was caused by automation, according to Baker.
Ohio has a big stake in whatever happens on trade. Because NAFTA created a unified supply chain in the auto industry, Ohio’s two largest trading partners are Mexico and Canada.
In 2015, Ohio companies and farmers exported $51.9 billion worth of goods, more than double what the state exported in 2000. State officials claim 260,000 jobs in Ohio depend on exports, which include industrial machinery, computers, vehicles, automotive parts, and aircraft.
“There is no doubt Trump is speaking to very real pain,” Muro said. “The question is (over) the relevance about the prescribed solution.”
“Even if you were to manage to bring home significantly more manufacturing, you won’t necessarily bring home that many jobs or nearly as many jobs as you would have 20 years ago,” Muro said. “That’s a problem really for everyone. It means U.S. manufacturing is more competitive than it was a decade ago, but it is a far less populous job creator.”
Muro said one solution is a “very serious high-quality fundamental retraining” program that give workers the skills they need in a digital age.
“To even stay in manufacturing is going to require a degree of digital skills,” he said.
By the numbers
$51.9B: Exports by Ohio companies and farmers in 2015.
260,000: Number of Ohio jobs that depend on exports.
7M: Number of lost manufacturing jobs in U.S. since 1979.
6: Number of jobs it takes to produce $1 million in manufacturing output.
25: Number of jobs it took to produce $1 million in manufacturing output in 1980.
48: Percentage of Ohio voters in November who said trade destroys jobs.
Sources: Brookings Institution, U.S. Bureau of Labor Statistics, Network exit polls.
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