In reality, China, as the second-largest source of U.S. imports, supplies high-quality, competitively priced goods that have helped fill store shelves, ease inflation and deliver real savings to American consumers.
by Mei Xing
Recently, there has been an argument about the so-called “China shock” being the reason for job losses in the United States. But a more nuanced approach is necessary to explain the contraction of manufacturing jobs in the United States, including the overall economic dynamics in developed countries, automation and a combination of domestic factors.
GLOBAL MANUFACTURING DECLINE
The Groningen Growth and Development Centre in the Netherlands finds that manufacturing employment typically follows an inverse U-shape: it rises during early industrialization but declines as economies advance and consumer demand shifts toward services. This leads to a gradual movement of labor from manufacturing into the service sector. Take the United States itself for example:
In 1950, goods accounted for around 60 percent of American consumption; today they represent just a third of spending and just 10 percent of national jobs.
According to a senior fellow at the American Enterprise Institute (AEI), manufacturing job losses in developed economies began well before China joined the WTO in 2001.
A 2025 JPMorgan analysis also indicates that this structural shift occurred regardless of trade deficits, noting similar drops in countries like Germany and Japan — both of which consistently ran trade surpluses.
AUTOMATION DRIVES LOSSES
Automation, not trade, has been the main driver of manufacturing job losses in the United States, as pointed out in a recent op-ed by Nobel Laureate James J. Heckman and economics professor at the University of Pennsylvania Hanming Fang.
Research also shows that the adoption of industrial robots in the United States from 1990 to 2007 led to a loss of 360,000 to 670,000 jobs. So, even if the United States completely stops importing from China, many jobs will still be replaced by robots.
A number of solid research pieces also make the same case:
Professors at Ball State University in Indiana pointed out that between 2000 and 2010, only about 13 percent of U.S. manufacturing job losses could be attributed to international trade, with the remaining driven by productivity gains (automation, efficiency and technology improvements).
Recent AEI research suggests that manufacturing job shrinkage has been driven largely by productivity gains rather than offshoring alone: from 2001 to 2024, U.S. manufacturing employment fell by approximately 22 percent, but real manufacturing output increased by about 40-50 percent over the same period.
