Date of this Version
Yeutter Institute International Trade Policy Review, December 7, 2022
The U.S. International Trade Commission (ITC) recently released its report on the distributional effects of trade and trade policy on U.S. workers and “underrepresented and underserved communities.” The report catalogs a host of information gathered from a literature review and several roundtables on the adverse effects of U.S. manufacturing imports. But the report’s laser focus on manufacturing imports leaves a huge gap for readers interested in the distributional effects of trade.
Manufacturing imports are an important part of trade, but they aren’t all of trade. Trade is imports and exports, goods and services, inputs and final goods. Trade is manufacturing, but it’s also agriculture and services. And you need to look at the full picture to understand the distributional impacts of trade and trade policy.
While trade can mean wage or job loss for a worker with skills specific to an import-competing industry, it can mean other things, too. Trade can be the average American household’s budget going further at Christmastime. Trade can be importing the widgets that used to be made here and exporting new high-tech manufacturing goods that use those imported widgets. Trade is what has helped one mom from Lithonia, Georgia, start her own online accessory and consignment store. Trade is the lifeline for much of U.S. agriculture. But the ITC report focused narrowly on the workers competing with manufacturing imports.
Per the U.S. Trade Representative’s request, the ITC held seven roundtables to gather information and each one was organized around a theme such as race, gender, and disability/age/education. Two of the roundtables were centered around a specific region—one on the agricultural community of the San Joaquin Valley in California, and another on the urban areas of Detroit. The ITC heard from workers across the country on a variety of topics not all explicitly connected to trade. Workers voiced frustrations about factory closings, the loss of manufacturing jobs in the United States, lack of childcare availability, barriers to relocation, challenges in gaining access to training or education, and disparate access to transportation, technology, internet connection, and health care, among other concerns.
The report also included a literature review, and a few relatively strong threads emerged:
First, greater import competition in manufacturing has been associated with a decline in the gender wage gap (not by rising wages among female workers, but rather largely driven by decline in the wages of men who switch out of import competing sectors).
Second, higher skilled workers experienced little or no wage or income loss.
Third, nonwhite workers fared worse than white workers following periods of sharp increases in manufacturing imports. Specifically, increased trade with Japan during the 1970s and 1980s led to a large drop in Black manufacturing employment, job losses associated with NAFTA were worse for nonwhite workers—particularly those without college degrees and in certain regions of the country—and Black workers moved from import-exposed manufacturing sectors to non-exposed sectors following increased trade with China during the 1990s and early 2000s.