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On China: What Republicans did 15 years ago to help create Donald Trump today

Donald Trump keeps asserting that the United States agrees to bad deals with other nations.
The ripple effects of the China deal have persisted for American workers, surprising economists.

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Donald Trump keeps asserting that the United States agrees to bad deals with other nations. The ripple effects of the China deal have persisted for American workers, surprising economists.

The Republican establishment began losing its party to Donald Trump on May 24, 2000, at 5:41 p.m., on the floor of the House of Representatives.

Urged on by their presidential standard-bearer, Texas Gov. George W. Bush, and by nearly all of the business lobbyists who represented the core of the party's donor class, three-quarters of House Republicans voted to extend the status of permanent normal trade relations to China. They were more than enough, when added to a minority of Democrats, to secure passage of a bill that would sail through the Senate and be signed into law by President Bill Clinton.

The legislation, a top Republican priority, held the promise of greater economic prosperity for Americans. But few could predict that it would cause a series of economic and political earthquakes that has helped put the GOP in the difficult spot it is in today: with the most anti-trade Republican candidate in modern history, Trump, moving closer to clinching the party's nomination.

"I try not to regret things," said Sen. Jeff Sessions, R-Ala., a Trump supporter who was one of 83 senators to vote for the China bill. "That's one I regret."

"The Republican electorate has gone along with their leaders, begrudgingly, for 20 or 30 years," Sessions said. "I supported all these trade agreements … but it's becoming clear that the promises that were made weren't true."

The 2000 vote effectively unleashed a flood of outsourcing to China, which in turn exported trillions of dollars of cheap goods back to the United States. Over the next 10 years, economists have concluded, the expanded trade with China cost the United States at least 2 million jobs. It was the strongest force in an overall manufacturing decline that cost 5 million jobs. Those workers were typically men whose education stopped after high school, a group that has seen its wages fall by 15 percent after adjusting for inflation.

For blue-collar workers, the economic and political effects of permanent normal trade relations with China have swamped the effects of any other trade decision in the past 25 years. Economic evidence suggests the North American Free Trade Agreement, which passed on a bipartisan vote in 1993, did not cause anywhere near the same level of factory layoffs or wage losses — or any meaningful challenge to the GOP's pro-trade orthodoxy in presidential nominations.

Trump, who has won important victories in states such as Michigan, Illinois, North Carolina and South Carolina that have been buffeted by the new trade, has built his insurgent campaign in part on opposition to what he calls a bad deal with China. "It is a typical example," he proclaims on his website, "of how politicians in Washington have failed our country."

Trump's voters also break from conservative orthodoxy on trade, and so, increasingly, do other Republicans. Many of his most avid backers, polls show, are the same low-educated, working-class Americans who have struggled economically.

"I've always been a free-trade guy," said Gene Ebergeny, 61, who lives in suburban Chicago. "I've thought it's important. But it feels like we're giving away the farm."

"I think we're getting screwed by trade," said Mike Singer, 54, of Chicago. "We're losing a lot of jobs."

U.S. trade policy came to a crossroads in the years before the China vote. Congress voted against giving Clinton expedited power to negotiate new trade deals during his second term. World Trade Organization negotiations had come under violent protest in Seattle in 1999.

In 2000, China was on course for membership to the WTO, a status effectively giving its exporters access to markets in the United States and around the world. Under WTO rules, member countries are required to extend preferential trading treatment to one another, or what the United States had begun to call permanent normal trade relations. For China, that required an act of Congress.

Business leaders stood nearly united in their support of the bill, arguing that the vote would serve only to open China's markets to U.S. exports. They were joined in that argument by a pair of prominent Texas Republicans: Rep. Bill Archer, the chairman of the House Ways and Means Committee who sponsored the bill; and Bush, who by then had locked up the party's presidential nomination.

A week before the House vote, Bush urged Republicans to approve the bill on freedom and foreign policy grounds, and also on economic ones. "Trade with China," he said, "serves the economic interests of America."

Business groups that lobbied the bill recall that the closing argument was not hard to sell. The bill passed the House by a vote of 237-197. The Senate approved it 83-15 in September.

By 2004, U.S. imports from China had nearly doubled. By 2011, the U.S. trade deficit with China had quadrupled. Thanks to the law, Americans were able to buy cheaper electronics, clothes, toys and other consumer goods.

Some companies ramped up exports to China, creating jobs. Other companies were able to send millions of jobs to a country where factory workers earned far less than those in the United States.

The ripple effects of those job losses have persisted, for workers, in ways that surprised many economists. Standard economists predicted no net job losses from expanded trade with China, economists David Autor, David Dorn and Gordon Hanson wrote in a working paper released this year. In reality, the authors found, new jobs have not materialized quickly, as expected, to replace the jobs lost from trade.

"Adjustment in local labor markets is remarkably slow, with wages and labor-force participation rates remaining depressed and unemployment rates remaining elevated for at least a full decade after the China trade shock commences," they wrote. "Exposed workers experience greater job churning and reduced lifetime income."

It took Trump, a longtime critic of trade agreements, to rally conservative voters around the idea that the Chinese are ripping off the working class via bad trade deals. Trump has won several of the states that Autor and his co-authors identified in another paper as hardest-hit by import competition from China, including South Carolina, Massachusetts and Mississippi. His surge has pushed many Republicans toward a more protectionist stance.

Workers who lost jobs when companies outsourced production to China were left "on an island, economically and politically," said Bruce Haynes, a Republican consultant who is president of the political consulting firm Purple Strategies. "There's an acknowledgment that this is upon the party. We know we need to do something about it, but we can't do anything about it right now, because we're in the middle of a hurricane."

Jim Tankersley covers economic policy. © 2016 Washington Post

On China: What Republicans did 15 years ago to help create Donald Trump today 03/24/16 [Last modified: Thursday, March 24, 2016 7:38pm]
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