However, we have learned in class that while the jobs may have been lost to offshoring, it has ultimately benefited the United States far more than the loss of jobs. The prospect of having to produce the goods made in China within the United States would lead to either a wage decrease or a price increase, which would negatively effect the real wages of the workers within the United States. By offshoring these jobs to places like China, where there is a labor abundance, the United States is able to reap the benefits of having higher wages and paying less for the goods produced in China. China's labor abundance is massive in comparison to other nations, meaning that labor can be utilized at an extremely cheap price. This works well in the production of goods that require more labor rather than capital. Since this is the case, bringing the jobs back from China would only hurt the United States more than it would benefit it.
Trump also mentioned the trade imbalance between China and the United States. We have also discussed in class how this can be misrepresented. China is often the producer of the final good, but not the parts that go into the final good. However, export measurements only measure the value of the final good, not the value added. This means that the data can be misconstrued to show an enormous trade deficit for the United States. This seems to have a political motivation behind it, as economists who work for the government would have this data readily available to them. At any rate, it seems that Donald Trump is moving closer to imposing further tariffs on the importation of goods from APEC nations, which would ultimately only hurt the United States citizens, as it would decrease the terms of trade by raising the price of imports. This rise in import good prices would shift production back home, but at a higher price to consumers, decreasing the real wages of US citizens in the process.
For more on Trump's trip and comments on his way through Asia, please read this article:
Firms exist to reduce transaction cost. As we learned in class, a firm grows the cost of transformation, transaction and transportation all increase. Contracting production to another country (especially one that is labor abundant) helps the price of goods stay low and benefits the consumer. The political rhetoric around “American jobs” fails to include the increased price of goods that American consumers would have to pay. I think this is an example of emotional voting - where voters are reacting from a sense of fear (fear or losing one's job) rather than the numbers.
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