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News from EPI Wal-Mart trade deficit with China cost more than 400,000 jobs from 2001 to 2013

Between 2001 and 2013 the Walmart-based trade deficit with China eliminated or displaced more than 400,000 U.S. jobs, according to a new paper from EPI Director of Trade and Manufacturing Research Robert E. Scott. In A Conservative Estimate of ‘The Wal-Mart Effect’ Scott calculates the employment effects of growing trade deficits attributable to Wal-Mart’s importing of Chinese goods, since China’s entry into the WTO in 2001.

“Wal-Mart’s reliance on cheap Chinese imports is an example of how powerful economic actors benefit from China’s unfair trading system. Wal-Mart’s gain, however, is not the country’s gain,” said Scott.

Key findings from the report include:

  • The Wal-Mart-based trade deficit with China alone eliminated or displaced over 400,000 U.S. jobs between 2001 and 2013.
  • Wal-Mart is responsible for a $36.7 billion increase in the U.S. trade deficit with China between 2001 and 2013—15.3 percent of the total growth in the U.S.-China trade deficit.
  • Chinese imports entering through Wal-Mart totaled at least $49.1 billion in 2013, up from $11.4 billion in 2001.
  • The manufacturing sector has been hardest hit by the growth of Wal-Mart’s imports. Wal-Mart’s increased trade deficit with China between 2001 and 2013 eliminated 314,500 manufacturing jobs.
  • On average, each of the 4,835 Wal-Mart stores in the United States was responsible for the loss of about 86 U.S. jobs due to the growth of Wal-Mart’s trade deficit with China between 2001 and 2013.

The growing trade deficit with China displaced 3.2 million U.S. jobs in the United States between 2001 and 2013, and it has been a prime contributor to the crisis in manufacturing employment over the past 15 years. The current unbalanced U.S.-China trade relationship is bad for both countries. As the world’s biggest retailer, Wal-Mart has played a major role in creating that imbalance. The U.S. relationship with China needs fundamental change, Scott argues. Addressing the exchange rate policies and labor standards issues in the Chinese economy should be important national priorities.