The impact of U.S.-China trade relations has been significant over the years. In the 1970s, diplomatic relations were reestablished, but it was not until the 1990s that trade between the two countries started to expand. The growth in U.S.-China trade has been substantial, with imports from China accounting for a significant portion of all U.S. imports and exports. The U.S. government's policies favoring international trade and the granting of normal trade relations to China played a role in this increase.
The composition of imports and exports between the U.S. and China reveals clear patterns. China has a comparative advantage in industries such as furniture, textiles, apparel, and electronics, accounting for a significant share of U.S. imports in these categories. U.S. exports to China, on the other hand, are more concentrated in agriculture and forestry products.
The rise in trade with China has raised concerns about its impact on U.S. employment, particularly in the manufacturing sector. Studies suggest that the increase in imports of Chinese goods has contributed to significant declines in U.S. manufacturing jobs. Industries facing stronger competition from Chinese goods have experienced contractions in employment relative to others.
The U.S.-China trade war, which began in 2018, disrupted the growth in trade between the two countries. The U.S. imposed tariffs on Chinese imports, leading to a decline in imports from and exports to China. However, trade has partially recovered in recent years, driven by increased U.S. consumption during the pandemic and imports from China that were not subject to tariffs.
The provided chart depicts the areas in manufacturing employment that have been affected by imports from China. It is evident that the sectors most significantly impacted are apparel and accessories, as well as computer and electronic products. These sectors are characterized by labor-intensive processes, which makes them more vulnerable to competition from Chinese imports. On the other hand, capital-intensive sectors show relatively less impact. It is worth noting that the Food and Kindred products sector actually experienced a positive effect on employment, suggesting a favorable outcome in that particular area.
Source: https://www.stlouisfed.org/annual-report/2022/shifting-tides-global-trade
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