- President Donald Trump’s trade war simplifies a complicated issue: The vast majority of US manufacturing job losses since 2000 have been the result of automation or technological improvements, not China.
- US employment in manufacturing has fallen by a third since the 1980s.
- Rather than make adversaries of businesses that automate manufacturing processes, Trump has picked a fight with China, which is linked to only about a sixth of manufacturing job losses.
- Research has found that US counties exposed to increased trade competition from China tend to swing politically more to the right.
- The trade war may be complicated economically, but politically there’s an obvious advantage for Trump.
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Last week, President Donald Trump increased tariffs on $US200 billion worth of Chinese goods. While consumers have been generally unscathed by the trade war with China so far, this new escalation is likely to have direct effects on consumer products and raise prices for shoppers and retailers.
As an economic policy, the trade war is complicated. As a political one, it makes a ton of sense for Trump.
Employment in US manufacturing fell from 18.9 million jobs in 1980 to 12.2 million today. The explanation for that is complicated, and Trump is attempting to make it deceptively simple.
He’s playing into a common misconception – that China stole American jobs – when the real culprit is automation. Even more, that message is most relevant in the very places where he won big in 2016 and surely must win big in 2020 to keep the presidency.
Imports from China are estimated to be responsible for a sixth of the US manufacturing job losses in the 2000s. But one-sixth is not a majority. The far larger cause has been automation, which another study estimated was responsible for 87% of those job losses.
It doesn’t matter whether the robot is in Shaanxi or Cincinnati: Automation is the root source of most of the pain.
Still, a nation is easier to fight than the actual causes of job losses. Trump is not going to attack Siemens AG or Honeywell on the stump, even though they’re the ones building the robots.
Automation has nuance: It took 25 jobs to generate $US1 million in manufacturing output in 1980, and today it takes 6.5 jobs. That’s good, but it’s also bad, and you can see how we’re beginning to lose the political punchiness.
Making China a scapegoat gives the president a clearer target for animus than the structural issue of automation.
And it’s going to work!
A 2016 National Bureau of Economic Research working paper looked at this very topic.
The gist is that congressional districts that saw increased exposure to competition resulting from trade with China were more likely to polarize. Trade-exposed districts that were majority-minority or that were initially in Democratic hands became more liberal, while trade-exposed districts that were Republican-leaning or majority white got substantially more conservative.
The findings on the presidential level spell out exactly what Trump is tapping into: The more a county’s exposure to Chinese trade rose since the early 2000s, the more likely it was to shift toward favouring Republicans, and that rightward shift for China-exposed counties got bigger in the second half of the period studied.
You can even see this effect for yourself. This chart plots every US congressional district based on two things.
- The Y-axis is how much the Cook Political Report rated its partisan lean in the 2018 election. Dots that are higher up on the chart are more Democratic-leaning; dots that are lower on the chart are more Republican-leaning.
- The X-axis is how susceptible the workforce in each congressional district is to automation, according to a 2019 study from the Metropolitan Policy Program at Brookings. The dots more on the left have a workforce with jobs that are less vulnerable to automation, while the ones on the right have higher percentage of work that can be automated.
Now, we could run a fancy regression, but you don’t have to be a mathematician to observe that there’s a pretty distinct link between a district’s risk for automation and the district’s feelings toward Republicans.
So, is this a deliberate strategy on the part of the president to optimise an issue that energizes his base and that Democrats have been lacklustre at addressing?
The answer is unclear.
Looking to the reporting about the president’s mentality about the trade fight, it appears to be more from the gut than about actual economics. Hiking tariffs and raising prices domestically doesn’t actually constitute a sophisticated policy regarding readying workers for automation.
But even if the policy doesn’t bear fruit, politically it’s clear why this could work. If Trump doesn’t want to distinguish between automation and China’s manufacturing growth, it could follow that his voters don’t see the need for specificity either.
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