“At the core of former President Donald Trump’s aggressive trade policies was a relatively simple—perhaps overly simplified—promise: Tariffs on Chinese-made products would drive manufacturers out of China.
“Many tariffed companies will be leaving China for Vietnam and other such countries in Asia,” Trump claimed in May 2019, about a year after his tariffs were first imposed. “China wants to make a deal so badly. Thousands of companies are leaving because of the Tariffs,” he tweeted a few months later, suggesting that the outflow was already underway. “If you want certainty, bring your plants back to America,” Robert Lighthizer, Trump’s U.S. trade representative, lightly threatened in a New York Times op-ed in May 2020, as the trade war’s second anniversary arrived.
But the tariffs failed to achieve that primary policy aim, according to a new paper published by researchers at the University of Kansas and the University of California, Irvine. Roughly 11 percent of multinational companies exited China in 2019, the first full year in which tariffs were in place—a significant increase from previous years. But the overall number of multinational firms operating in China actually increased during that same year, as foreign investment continued to flow into China even as the trade war ratcheted up costs.
In fact, the number of U.S.-based multinationals in China actually increased from 16,141 in 2017 to 16,536 in 2019. Non-U.S. companies were more likely to exit China during 2019 despite not being subjected to Trump’s tariffs.
“We estimate that less than 1 percent of the increase in U.S. firm exits during this period was due to U.S. tariffs. And U.S. firms were no more likely to divest than firms from Europe or Asia,” researchers Jiakun Jack Zhang and Samantha Vortherms wrote in The Washington Post this week.”
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“Trump is no longer running U.S. trade policy, but his failed tariffs on Chinese imports are still in force. Lighthizer’s replacement in the Biden administration, U.S. Trade Representative Katherine Tai, has said the tariffs provide “leverage” over China.
But that perspective is no more grounded in reality than Trump’s promises that his tariffs would cause companies to flee China. American consumers are bearing nearly 93 percent of the costs of the tariffs applied to Chinese goods, according to a recent report from Moody’s Investors Service. How is this giving the White House leverage over China?”
“Essentially anywhere you go in the United States right now, you’re going to encounter “help wanted” signs. But just because a bar or restaurant or gas station wants a worker doesn’t mean a worker wants to work for them. The millions of jobs available aren’t necessarily millions of jobs people want.
“A lot of what people are seeing are low-paying jobs with unpredictable or not-worker-friendly scheduling practices, that don’t come with benefits, don’t come with long-term stability,” Shelly Steward, director of the Future of Work Initiative at the Aspen Institute, told Recode. “And those are not the types of jobs that any worker is eager to take on.””
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“Tim Brackney, president and COO of management consulting firm RGP, refers to the current situation as the “great mismatch.” That mismatch refers to a number of things, including desires, experience, and skills. And part of the reason is that the skills necessary for a given job are changing faster than ever, as companies more frequently adopt new software.”
“Refugees and immigrants are not only good for the economy, they can help us reverse dangerous trends in stagnant cities and towns. Policymakers should stop referring to refugees as a burden and trust that new Americans will benefit the nation.”
These jobs paid people enough money to live on, even enough to support a family. They provided health insurance so people could go to a doctor if they got sick. They even came with pensions so that once you’d worked for a certain number of years, you could actually stop working. You could rest.
But there was a problem.
These jobs weren’t for everyone. They were mostly for white men, and mostly in certain places, like a factory or an office. For everyone else, there were jobs that paid less, with fewer benefits — or no benefits at all. And over time, there were more and more bad jobs and fewer and fewer good jobs, and even the good jobs started getting less good, and everyone was very tired, and there was not enough money.”
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“The pandemic has made matters even worse. Millions of front-line workers risked their lives doing jobs that often offered them little more than poverty-level wages in return. Even for those able to work in the relative safety of their homes, the pandemic often sapped whatever joy, camaraderie, or fulfillment jobs had once offered — 40 percent of workers in one 2020 survey, the majority of them working remotely, reported experiencing burnout during the pandemic. The problem was only compounded for parents and others who took on new caregiving responsibilities, with mothers especially dealing with high levels of exhaustion and depression.
But the pandemic has also been a turning point for many workers, leading them to reevaluate their jobs in the face of new dangers — or a realignment of priorities brought on by a once-in-a-lifetime public health disaster. Indeed, the pandemic has led to record numbers of people quitting their jobs — 4 million this April alone, a phenomenon so widespread it’s been called the Great Resignation.”
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“over the past 70 years or so, retail, hospitality, and other service jobs have proliferated while the manufacturing sector and others that once provided well-paid jobs with benefits have shrunk. That’s part of the reason American wages stagnated and more and more people had to go without health insurance (at least before the passage of the Affordable Care Act). “To a degree, the crisis today in work is because of this huge expansion of the service sector, which was not covered by the kind of regulations or unions or social norms that we once expected,” Lichtenstein said.
Other factors, too, combined to make jobs worse. Long hours became more common as more and more workers were declared exempt from the 40-hour standard. The rise of “just-in-time scheduling” made retail and other service work increasingly unpredictable, leaving workers unsure if they’d get enough hours to be able to pay rent, or be able to find child care during their ever-changing shifts. And some jobs themselves changed to become less pleasant. Retail, for example, “moved toward more customer self-service and away from the sort of skilled model of retail selling,” which meant less opportunity to interact with customers and hone sales techniques, and more of an emphasis on mechanically keeping people moving through a store”
“According to a recent congressional report, credit card balances actually declined sharply, by $76 billion, in the second quarter of 2020. You might also assume that, with the guillotine of joblessness hanging precipitously in the balance, Americans might defer large purchases, like homes or cars. Again, you’d be wrong: By the fourth quarter of 2020, mortgage debt grew to $10 trillion (compared to a fourth-quarter 2019 statistic of $9.56 trillion), and auto loan debt reached $1.4 trillion.”
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“During the worst part of Covid, people were pretty cautious. Debt did rise, but not all debt rose. For example, the US experienced the largest recorded quarterly decline in credit card balances (about $76 billion, see the Congressional Research Service study of May 6, 2021). For one thing, people stopped spending; they really just cut back on expenditures. That’s one of the reasons that businesses were so hard-hit: Aside from the lockdowns and all the rest of it, people weren’t buying stuff.
But I would say that what really saved it from being a total disaster was the three stimulus checks. That first stimulus check was spent almost entirely on expenses, and it appeared that was the period of highest unemployment. When the second stimulus check came out, people were more likely to spend that on debt; that may be one reason that we began to see a decline in credit card debt. And then by the time we got to the third stimulus check, some people were spending it, some people were buying down debt, but a surprising number saved it. The personal savings rate actually reached a high in April of 2020. Who would have believed it?”
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“The Census Bureau began doing a survey that was very helpful during the pandemic called the Pulse survey, which comes out every week and asks people about their economic difficulties. In the survey that covered May 12 through 24, there were still 26 percent of respondents who said they were having trouble paying their household expenses. That’s a red flag. And 9 percent of adults were in households where they said that at least some time in the past week, there had not been enough to eat. So it appears to me that the people who have been in dire straits are not going to get out of those dire straits any time soon.”
“The Biden administration in July issued a warning to US companies: Doing business in Hong Kong is increasingly risky. The advisory, released jointly by the departments of State, Treasury, Commerce, and Homeland Security, was basically a giant red flag cautioning companies and investors against the complications that are emerging under China’s national security law.
China imposed the sweeping legislation a little more than a year ago. It has since stifled Hong Kong’s pro-democracy movement and undermined its autonomy, rule of law, and free speech traditions.
This tenuous political climate has shaken Hong Kong, but it has not yet upended its status as a global financial capital. The United States’s advisory is recognition that this might change as China continues its crackdown in the territory. International businesses — and their employees — could soon find themselves entangled in national security law enforcement.”
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“China, for its part, is banking that Hong Kong’s infrastructure and economic climate will still make it a destination for foreign businesses in Asia despite the crackdown. After all, trade wars, tense Washington-Beijing relations, Beijing’s atrocious human rights record, and US sanctions have yet to stop most US firms from doing business in mainland China. And that may keep Hong Kong’s economic might intact while doing little to stop its democracy from crumbling.”