Free Trade

Trump's Trade War Just Killed 1 Million Jobs

The unseen consequences of the trade war matter as much as the more visible.



The head of Alibaba, China's largest e-commerce business, says he is canceling plans to bring 1 million jobs to the United States because of the ongoing trade war between the two countries.

In an interview with Chinese state media, Jack Ma said last year's promise to expand Alibaba's reach into the United States was based on "friendly China-U.S. cooperation, and the rational and objective premise of bilateral trade." The expansion plan was announced in January 2017, when Ma visited incoming President Donald Trump at Trump Tower in New York. At the time, Trump said he was looking forward to doing "great things" with Ma.

That 1 million anticipated jobs were expected to come not from building warehouses or distribution centers but from allowing American businesses to tap into Alibaba's massive marketplace to make sales to Chinese consumers. Now Ma says the plan has to be put on hold. "The current situation has already destroyed the original premise," he said Wednesday. "There is no way to deliver the promise."

On Monday, Trump announced 10 percent tariffs on $200 billion of Chinese imports, to take effect on September 24. China has already outlined a plan to retaliate with more tariffs against American agricultural products. It's the largest escalation so far of the trade war between the two nations, which began in March with the Trump administration's imposition of tariffs on steel, aluminum, and Chinese industrial goods. The latest round of tariffs will target consumer goods such as electronics, furniture, clothing, and toys.

In comments to investors reported by the Financial Times, Ma said China should prepare for a lengthy struggle with the United States. "It's going to last a long time, maybe 20 years," Ma said. "It's going to be a mess."

The loss of Alibaba's planned investment in the United States won't show up on any reports about job losses triggered by tariffs. That might make the cost less painful—and certainly less politically significant—than the jobs that have been lost at places such as a nail factory in Missouri, a keg manufacturer in Pennsylvania, and tire plants in Arkansas. But the unseen consequences of the trade war matter. Ma's decision means thousands of American small businesses will not have access to Alibaba's massive marketplace, that Chinese consumers using Alibaba will have fewer choices, and that fewer jobs will be created in the United States

Ironically, this sort of opportunity for American businesses to serve Chinese consumers would probably help close the U.S. trade deficit with China—a major goal of Trump's trade policy. The tariffs, meanwhile, have only caused America's trade deficit to widen.