(ATF) Donald Trump's trade war with China has caused a net loss of 245,000 American jobs, a study commissioned by the US-China Business Council (USCBC) has shown.
The group, which represents major US companies doing business in China, said the study by Oxford Economics also includes an “escalation scenario”. That estimates a significant decoupling of the world's two largest economies could shrink US gross domestic product by $1.6 trillion over the next five years.
This could result in 732,000 fewer U.S. jobs in 2022 and 320,000 fewer jobs by 2025, the study concluded. However, it added, a gradual scaling back of tariffs on both sides would boost growth and lead to an additional 145,000 jobs by 2025.
The study comes against a backdrop of a sharp decline in US employment. US Labor Department data showed initial jobless claims jumped to 965,000 last week, 176,000 more than analysts expected. Continuing claims came in at 5.27 million, 271,000 above expectations.
AN AWFUL OUTCOME
“That's an awful outcome,” said James Knightley, chief international economist at ING. “The ongoing stress in the jobs market is clear for all to see. After a fall in employment in December we need to be braced for another decline in jobs in January.”
The speed at which new claims are approaching 1 million has alarmed analysts. “Given the resurgence in Covid-19 [cases], we expected initial jobless claims would likely near the 1 million mark, but it came much sooner than we thought,” said Beth Ann Bovino, US chief economist at S&P Global Ratings.
While seasonal factors may have played a role, S&P suspects the huge jump in claims reflects a surge in unemployment benefits applications after the Christmas stimulus package was passed.
“It’s a wake-up call, making it clear that the jobs market is far from healed,” Bovino added. “More importantly, this new found demand exposes how many people are suffering and that many more people are out of work and are now being counted,” said Bovino.
CHALLENGE FOR BIDEN
The USCBC study was released a day after the labour data and less than a week before Joe Biden is set to take office and begin a major analysis of US trade policy, including consultations with democratic allies over punitive China tariffs imposed by Trump.
Biden has said he plans no immediate changes to current tariffs, but said he will work with allies to pressure China to change its trade behaviour.
The study estimates that US exports to China support 1.2 million American jobs and that Chinese multinational companies directly employ 197,000 Americans.
US companies invested $105 billion in China in 2019. “With China forecast to drive around one-third of global growth over the next decade, maintaining market access to China is increasingly essential for US businesses' global success,” the study authors wrote.
With reporting by Reuters