Who do Republicans have to thank for the rise of Donald Trump? In a very funny way, the answer is the People’s Republic of China. No, I don’t mean to suggest that Trump is a literal Manchurian candidate, brainwashed by members of a shadowy Communist conspiracy to bring down American democracy from within. But take a look at the regions where Trump’s support is strongest, as well as his popularity among white men with a high school or lower education, and you’ll see a clear pattern. Trump’s America is the America that’s been hardest hit by Chinese-driven deindustrialization.
Over the past several months, the billionaire real estate developer has electrified Republicans by focusing his presidential campaign almost exclusively on immigration. If there is one thing that GOP primary voters know about Trump, it is that he intends to build a wall along the southern border of the United States and that he will somehow strong-arm Mexico into paying for it. If there’s another thing those voters know, it’s probably that Trump favors barring Muslims, or at least some Muslims, from entering the U.S. “until we can figure out what’s going on”—the centerpiece of his first TV campaign advertisement. But Trump has also drawn attention to the U.S. trade deficit with China, shaking a metaphorical fist at the Asian superpower since at least 2011. And as of this week, according to a report by Maggie Haberman of the New York Times, Trump is calling for a 45 percent tariff on Chinese imports. Though Trump insists that he is “a free trader,” he argues that China’s trade practices are so egregiously unfair that the U.S. has little choice but to retaliate.
The candidate’s detractors will no doubt see his China-bashing as another example of Trumpian buffoonery. Most students of U.S.-China trade will tell you that both countries benefit from the flow of goods and services across the Pacific, and that although China is guilty of imposing nontariff barriers, subsidizing its exporters in violation of global trade rules, and failing to respect the intellectual property rights of U.S. entities, the pros for American investors, workers, and consumers massively outweigh the cons. There is a problem with that view, however.
Regardless of the effect of Chinese import competition on the U.S. economy as a whole, there is no question that its impact on some regions, and some groups of workers, has been devastating. Everyone understands that free trade will be a boon to some and a burden to others. But it is the job of government to ensure that the “losers” from Chinese import competition are given the help they need to adjust to global economic integration. And it seems pretty clear that our government hasn’t done this job terribly well.
Back in 2013, David Autor, David Dorn, and Gordon Hanson published a stunning paper analyzing the impact of Chinese competition on local labor markets in the U.S. from 1990 to 2007. Regions that bore the brunt of this competition saw higher unemployment, lower labor force participation, and reduced wages. Manufacturers that found themselves competing with Chinese imports shed jobs, and some were forced to shut down altogether. Interestingly, the decline in wages triggered by the surge in Chinese imports was primarily observed outside of the manufacturing sector. As employment levels and wages fell in the hardest-hit regions, average household earnings fell too. Inevitably, families in these regions were forced to rely on unemployment, disability, and in-kind medical benefits, among other transfers. The negative impact on employment was particularly pronounced for noncollege-educated adults.
In preliminary work, Autor, Dorn, and Hanson have found that by reducing male employment opportunities, rising Chinese import competition may have contributed to falling marriage rates and a sharp increase in the share of children raised in low-income households. These communities have seen many other problems that the authors don’t directly address, from high levels of child maltreatment and drug abuse to sky-high suicide rates. Hopelessness and despair are a familiar fact of life in Trump’s America.
Does this mean that the U.S. would have been better off had we walled ourselves off from Chinese imports, or had we imposed Trump-style 45 percent tariffs decades ago? I seriously doubt it. Yet it is striking to consider just how indifferent Republican and Democratic elites have been to the devastating effects of deindustrialization.
Ryan Avent, drawing on the work of economists Doug Campbell and Ju Hyun Pyun, has observed that between 1990 and 2002, the dollar had an effective appreciation of 49 percent, which in turn led to a spike in relative unit labor costs in the U.S. This spike alone accounts for much of the decline in manufacturing employment. Where were the voices calling on the Federal Reserve and the Treasury Department to intervene in foreign-exchange markets to protect the interests of America’s manufacturing sector? They were presumably drowned out by the voices calling for policies that would protect the interests of the financial services and real estate sectors.
Of all the wackadoo ironies of Trump’s emergence as tribune of America’s white working class, the strangest of all is that as a billionaire real estate developer, Trump made his fortune in the most corrupt, coddled, and cronyist sector in the modern American economy. One of the reasons the consequences of deindustrialization were ignored by policymakers for so long is that they were masked by the housing boom. Rising home prices stimulated development and home renovation, which in turn generated employment for at least some men with high school or lower education—a disproportionately large share of whom were young immigrants and second-generation Americans living in the Sun Belt, not middle-aged whites languishing in the Rust Belt.
I have no idea if Donald Trump is going to win the Iowa caucuses or the New Hampshire primary or if he’ll go on to the win the Republican presidential nomination. What I do know is that when Trump bashes China, he is speaking to the anguish of millions of Americans who’ve long felt ignored. The failure of other Republicans to recognize that same anguish, and to do something meaningful about it, is a moral stain on the GOP.