Straight from the Specialists
(The views expressed in this column are the author’s own and do not represent those of Reuters)
Conventional wisdom says that exports are beneficial and imports are harmful. Conventional wisdom is wrong. A key element of this misperception is the mistaken idea that imports into a country cost jobs there. In fact, imports contribute to job creation.
In a political environment where trade and job creation are being hotly debated, it is vital to have a correct understanding of how imports truly affect jobs. The reality is that the increased economic activity associated with every stage of the import process helps support American jobs. A lot of them. The following analysis shows that over half a million American jobs are supported by imports of Chinese-made clothes and toys alone. These jobs are in fields such as transportation, wholesale, retail, construction, and finance, and in myriad other activities that are involved in turning a manufactured product into a good that is ready for use by the average American.
Imports from China of other products support additional jobs, as do imports from other countries. The belief that more imports equals less employment at home is false. It follows directly that the idea that trade deficits lead to higher unemployment is also false. Concern over the size of the U.S. trade deficit, and particularly its impact on jobs, is based on a misconception of the way trade affects economic activity.