Trade Freedom: How Imports Support U.S. Jobs

September 24, 2012

Many Americans cling to the notion that exports are good for creating jobs whereas importing goods threatens the jobs of domestic workers. However, imports have been linked to strong job growth and economic prosperity at all levels, say Derek Scissors, a senior research fellow at the Heritage Foundation, Charlotte Espinoza, a former research assistant at the Heritage Foundation, and Ambassador Terry Miller, the Mark A. Kolokotrones Fellow in Economic Freedom at the Heritage Foundation.

Consider: imports of clothes and toys from China alone create half a million U.S. jobs. This is because people found jobs in fields such as transportation, retail, construction and finance that would otherwise have not existed if it weren't for the goods brought in from China.

There exist some common misperceptions about imports and its effect on U.S. jobs.

  • The data used to measure trade gives full credit to the country that creates the final product, not where they got the parts from. Many imported goods start from U.S. intellectual property or components of goods that are simply produced or assembled elsewhere.
  • Furthermore, the competition derived from trading with other countries makes prices for goods lowers, thus increasing American consumption and helping the overall economy.
  • Finally, the U.S.-China trade deficit, for example, does not have the impact on jobs that many believe it does. Since the United States and China do not trade alone, jobs would move to other countries rather than just the United States.

In fact, there is a positive correlation between imports and U.S. job growth.

  • In the past 30 years, as imports have increased the unemployment rate has decreased.
  • In 2010, for example, apparel from China helped create 355,000 jobs.
  • Additionally, toys and sporting goods helped support 221,000 jobs.

In lieu of the facts, it is necessary for policymakers to adjust their paradigms and focus on more free trade rather than protectionism. Congress should recognize that imports support American jobs and pass policies that promote free trade. Furthermore, policymakers should stop using the trade deficit to justify the effect of trade on employment. Finally, if Congress were to improve trade data at a technical level, the Commerce Department could accurately measure the components used in production and assess the real benefits of trade liberalization.

Source: Derek Scissors, Charlotte Espinoza and Ambassador Terry Miller, "Trade Freedom: How Imports Support U.S. Jobs," Heritage Foundation, September 12, 2012.

 

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