You will be redirected back to your article in seconds
Skip to main content

Walmart’s China Sourcing Cost US More Than 400K Jobs

China remains the world’s largest manufacturing nation, a fact that has fueled a growing trade deficit with the United States, and major brands bringing in goods from the Asian nation are costing America jobs.

Walmart alone, according to a report released Wednesday by the Economic Policy Institute (EPI), spent at least $49.1 billion importing Chinese products in 2013 and likely accounted for 15.3% of the U.S. trade deficit growth with the country, which in that year reached $324.2 billion.

And from the time China entered the World Trade Organization (WTO) in 2001—a move that was supposed to reduce the deficit and create U.S. jobs—through 2013, Walmart’s imports from China displaced more than 400,000 American jobs.

Naturally, the manufacturing sector has taken the hardest hit from Walmart’s increased imports, the EPI report noted. In the 2001 to 2013 period, Walmart contributed to the loss of 314,500 manufacturing jobs, 75.7% of the total jobs hit.

“China has achieved its rapidly growing trade surpluses by manipulating its currency: it invests hundreds of billions of dollars per year in U.S. Treasury bills, other government securities, and private foreign assets to bid up the value of the dollar and other currencies and thereby lower the cost of its exports to the United States and other countries,” EPI noted in the report.

Labor rights and fair wages haven’t exactly been celebrated in China either and products have been kept “artificially cheap” EPI said, which further subsidizes China’s exports.

“Walmart has aided China’s abuse of labor rights and its violations of internationally recognized norms of fair trade by providing a vast and ever-expanding conduit for the distribution of artificially cheap and subsidized Chinese exports to the United States,” according to the report.

Related Stories

Generally speaking, exports support U.S. jobs and imports tend to displace them. As EPI explained, U.S. exports to China in 2001 supported 161,400 jobs, but U.S. imports displaced production that would otherwise have supported 1,127,700 jobs.

“Growth in trade deficits with China has reduced demand for goods produced in every region of the United States and has led to job displacement in all 50 states and the District of Columbia,” the report noted.

U.S. imports from China increased 329 percent to $336.1 billion between 2001 and 2013. If Walmart’s share of U.S. imports stayed at a stable 11.2%, it means the company’s imports increased from $11.4 billion in 2001 to $49.1 billion in 2013.

On average, according to EPI, each of the 4,835 stores Walmart operated in 2014 was responsible for the loss of 86 U.S. jobs.

Walmart announced a plan in 2013 to purchase $250 billion worth of goods by 2023 that support the creation of American jobs, but few have so far been created.

Citing a Journal of Commerce report from this year, EPI wrote, “Walmart remains, by far, the top importer of ocean shipping containers in the United States with total imports of more than 775,000 container-equivalents (TEUs) in 2014, exceeding total imports by Target, the number two importer, by more than 250,000 TEUs (48.7%, more than total Target imports).”

Walmart produced a list of manufacturing jobs this year that have been, or will be, created, and fewer than 4,100 manufacturing jobs were listed, some of which won’t come to fruition for up to 10 years. And according to EPI, Walmart has displaced more than 100 U.S. jobs for every one it has created.

“The current unbalanced U.S.-China trade relationship is bad for both countries, and Walmart has played a major role in creating that imbalance. The United States is piling up foreign debt, losing export capacity, and facing a more fragile macroeconomic environment,” EPI said.

China has become dependent on U.S. consumers for job generation, has suppressed the purchasing power of its middle class with a weakened currency and while it could have been investing money in public goods to benefit consumers and workers, China was buying trillions in reserves and government securities.

“The U.S. relationship with China needs fundamental change: addressing the exchange rate policies and labor standards issues in the Chinese economy should be important national priorities,” the report noted. “Walmart’s huge reliance on Chinese imports illustrates that many powerful economic actors in the United States benefit from China’s unfair trading system. Walmart’s gain, however, is not the country’s gain, as Walmart’s imports have contributed to the ever-growing trade deficit that imperils future economic growth.”