Why economists got free trade with China so wrong
Planet Money
NPR
4.6 • 30.5K Ratings
🗓️ 30 December 2025
⏱️ 26 minutes
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Summary
As U.S. trade with China exploded in the early 2000's, American manufacturing began to shrivel. Those workers struggled to adapt and find new jobs. It ran counter to how mainstream economics at the time viewed free trade ... that it would be a clear win for the U.S. Greg Rosalsky talks with David Autor about why economists got free trade with China so wrong.
Autor, an MIT economics professor, and his colleagues published a series of eye-opening studies over the last 15 years or so that brought to light the costs of U.S. trade with China. We also hear Autor's thoughts on the role of tariffs and get an update on his research. With better, more precise data, Autor says we have a more nuanced and "bleaker" picture of what happened to these manufacturing workers.
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Transcript
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| 0:00.0 | Hey, Greg Rizowski here. |
| 0:01.8 | Today, we're sharing our most popular bonus episode of 2025. |
| 0:05.8 | It's my conversation with economist David Otter from the beginning of this year. |
| 0:09.9 | It's about the cost of free trade. |
| 0:11.7 | If you're new to NPR Plus, we wanted to make sure you didn't miss this one. |
| 0:15.3 | If you've already heard it, don't worry, we'll be back with a fresh bonus episode for you in two weeks. |
| 0:20.7 | And if you're not signed up for Plus, but want more bonus content like this, go to plus.npr.org. |
| 0:31.3 | So for decades, the mainstream thinking in economics was that free trade would be a clear win for the United States. |
| 0:38.4 | Sure, the reasoning went some workers might lose jobs, but the thinking was they'd get new ones |
| 0:44.2 | as the economy changed and grew and everything would basically be fine. Everything turned out |
| 0:49.7 | not to be fine. No research project has made that more clear than one spearheaded by MIT |
| 0:55.3 | economist David Otter and his colleagues. The story that has been told about the consequences |
| 1:01.2 | of trade is so far from the reality of how people live, that it's just, you know, it's all gains, |
| 1:07.1 | everyone's better off, there's no real cost. I mean, in theory there could be, but in practice, |
| 1:11.0 | there's not. But that's just not the lived experience of anyone, and that's not what the data |
| 1:14.9 | ultimately showed. Over the last 15 years or so, Otter, along with economist David Dorn and |
| 1:20.3 | Gordon Hanson, have published a series of eye-opening studies on something known as the China |
| 1:25.9 | shock. The shock refers to what happened to the |
| 1:28.8 | United States after Chinese imports came flooding into the country starting around 2001. |
| 1:34.9 | What the economists found was devastating. Well over a million manufacturing jobs destroyed, |
| 1:40.5 | these job losses were hyper-concentrated in communities around America. The China |
| 1:45.8 | shock basically created miniature depressions in these communities, and former manufacturing |
... |
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