Report debunks U.S. Treasury chief's claim on China trade job losses

A U.S. think tank report has challenged the accuracy of U.S. Treasury Secretary Scott Bessent's claim that "3.7 million Americans lost their jobs" due to increased Chinese imports into the United States, while suggesting that expanded trade with China may have actually supported manufacturing employment in some areas.

In an article titled "Did 'China Shock' throw millions of Americans out of work?," published Wednesday by the Civitas Institute, the authors reviewed the academic papers Bessent cited to support his estimate. The report concluded that Bessent's figure is likely exaggerated by a factor of at least two to four.

Moreover, the article questioned the reliability of those same studies, noting that they estimate the effects of Chinese import growth by comparing job losses in the most-exposed regions to those in less-exposed regions. "Such estimates can't be used to calculate a nationwide job loss figure, because cross-area comparisons miss effects that are common across all geographic areas," the article argued.

Contrary to Bessent's claim, the article cited other research indicating that manufacturing employment sometimes fared better in areas more exposed to Chinese import competition. It also pointed out that no credible research supports the idea that the so-called "China Shock" caused job losses as large as Bessent suggested, and that the decline in U.S. manufacturing employment began long before increased trade with China.

The article traced manufacturing job losses in the United States back over a century. Manufacturing employment, it noted, peaked as a share of total employment before World War I – when farm workers still outnumbered factory workers – and has steadily declined in advanced economies for over 50 years.

Rather than trade alone, the authors highlighted rising productivity, particularly through automation, as the primary driver of the long-term decline in manufacturing employment. Between 2001 and 2024, while U.S. manufacturing jobs fell by 3.6 million, real manufacturing value added increased by $800 billion. Over the same period, real value added per labor hour rose by 93 percent.

Citing economist Steve Rose, the article noted that as manufacturing's share of employment shrank, management and professional jobs surged – growing from 18 percent of the workforce in 1960 to 32 percent by 2008.

"The long decline in, first, agricultural and then manufacturing employment was really a steady upgrading of jobs that continues unabated," the article concluded, framing these shifts as reflections of growing national affluence. 

It also recommended that public policy focus on supporting workers impacted by economic transitions.