Economic Snapshot | Trade and Globalization

Wal-Mart’s reliance on Chinese imports costs U.S. jobs

See Snapshots archive.

Snapshot for June 27, 2007.

Wal-Mart’s reliance on Chinese imports costs U.S. jobs

by Robert E. Scott

China’s entry into the World Trade Organization was supposed to improve the U.S. trade deficit with China and create good jobs in the United States. But those promises have gone unfulfilled: the total U.S. trade deficit with China reached $235 billion in 2006. Between 2001 and 2006, this growing deficit eliminated 1.8 million U.S. jobs (Scott 2007). The world’s biggest retailer, U.S.-based Wal-Mart was responsible for $27 billion in U.S. imports from China in 2006 and 11% of the growth of the total U.S. trade deficit with China between 2001 and 2006. Wal-Mart’s trade deficit with China alone eliminated nearly 200,000 U.S. jobs in this period (See Chart).

Wal-Mart trade deficits with China eliminated nearly 200,000 U.S. jobs, 2001-06

The manufacturing sector and its workers were hardest hit by the growth of Wal-Mart’s imports. Wal-Mart’s increased trade deficit with China eliminated 133,000 manufacturing jobs, 68% of all jobs lost. Overall, the Wal-Mart trade deficit displaced and 308,100 jobs in 2006. On average, 77 U.S. jobs were eliminated for each one of Wal-Mart’s 4,022 U.S. stores in 2006.  (See The Wal-Mart Effect for more details.)

Wal-Mart’s huge reliance on Chinese imports illustrates that many powerful economic actors in the United States benefit from China’s policy of maintaining an undervalued yuan, its abuse of labor rights, and other fair-trade norms. Wal-Mart’s benefit, however, is not the country’s gain, as these policies have contributed directly to the ever-growing trade deficit that imperils future economic growth.

Scott, Robert E. 2007.  Costly Trade with China: Millions of U.S. Jobs Displaced with Net Job Loss in Every State.  Briefing Paper. Washington, D.C.: Economic Policy Institute.

See related work on China trade | Trade and Globalization

See more work by Robert E. Scott