HICKORY, N.C.—In the late 1990s, this furniture-making hub seemed sheltered from the disruptive forces of globalization. Laid-off steelworkers from West Virginia, Tennessee and beyond streamed here for new jobs building beds, tables and chairs for American homes. The unemployment rate fell below 2%. These days, Hickory is still suffering from a series of economic shocks, none more powerful than China’s rise as an export power. The invasion of imported furniture drove factories out of business, erased thousands of jobs and helped drive unemployment above 15% in 2010. Stuart Shoun, 59 years old, has been laid off three times since 1999. After one layoff, the Hickory machinist studied architecture at a community college but then couldn’t find a job and returned to the furniture industry. He makes $45,000 a year, the same as he did nearly 20 years ago and $14,000 a year poorer after adjusting for inflation. Hickory, N.C., is still suffering from the aftershocks of Chinese imports. Donald Trump has tapped into potent anti-free-trade sentiment on the campaign trail. Video: Madeline Marshall/WSJ. Photo: Mike Belleme for The Wall Street Journal Mr. Shoun ’s son, Steven, a trained furniture upholsterer, manages a junkyard and discourages his own son, now in college, from working in the industry that gave North Carolina the nickname “Furniture Capital of the World.” Steven Shoun says he blames “the people who run our country and who run our companies” for Hickory’s economic turmoil. Mr. Shoun and his father say they favor Donald Trump for president, even though they don’t plan to vote. “I don’t think one vote will make any difference,” says Stuart Shoun. When import booms from Japan, Mexico and Asian “tiger” economies such as Taiwan arrived in the U.S., many cities and towns were able to adapt. China was different. Its emergence as a trade powerhouse rattled the American economy more violently than economists and policy makers anticipated at the time or realized for years later. The U.S. workforce adapted more slowly than expected. What happened with Chinese imports is an example of how much of the conventional wisdom about economics that held sway in the late 1990s, including the role of trade, technology and central banking, has since slowly unraveled. Advertisement The aftershocks are sowing deep-seated political discontent this election year. Disillusionment with globalization has fed one of the most unconventional political seasons in modern history, with Bernie Sanders and especially Donald Trump tapping into potent anti-free-trade sentiment. A Wall Street Journal series examining the causes and consequences of 2016's political upheaval How the China Shock, Deep and Swift, Spurred the Rise of Trump

Election 2016 Is Propelled by the American Economy’s Failed Promises Both presidential candidates aimed much of their criticism at 1994’s North American Free Trade Agreement, which boosted imports from Mexico. Even then, though, the real culprit was China, economists now say. Many U.S. factories that moved to Mexico did so to match prices from China. Some of the new Mexican factories helped support U.S. jobs. For example, fabrics made in the U.S. are turned into clothing in Mexico for sale globally by U.S. companies. David Autor, a Massachusetts Institute of Technology economist who has studied trade, labor markets and technological change, calls China’s economy a “500-ton boulder perched on a ledge.” At some point, it would tumble and splatter what was below, but “you just didn’t know when,” he says.

Economists have long argued that while free trade creates winners and losers, the net results are beneficial. Americans gained from inexpensive imports and filled their homes with low-price bicycles, jewelry and kitchenware. U.S. companies won access to overseas markets. Workers in industries exposed to imports were expected to upgrade their job skills or move somewhere offering fresh opportunities. Japan’s invasion in the 1970s largely hit industries in cities with broad manufacturing bases on which to fall back. In Akron, Ohio, long the center of the U.S. tire industry, chemists trained at the University of Akron helped create a local polymer industry that employs tens of thousands of workers, said David Lieberth, a former Akron deputy mayor who chronicles the city’s history. China upended many of those assumptions. No other country came close to its combination of a vast working-age population, super-low wages, government support, cheap currency and productivity gains. Imports from China as a percentage of U.S. economic output doubled within four years of China joining the World Trade Organization in 2001. Mexico took 12 years to do the same thing after Nafta. Japan took just as long after becoming a major U.S. supplier in 1974. By last year, imports from China equaled 2.7% of U.S. gross domestic product, a percentage point larger than Japan or Mexico ever won. Japan’s import wave also challenged a limited group of advanced manufacturing industries, largely autos, steel and consumer electronics. China’s low-cost imports swept the entire U.S., squeezing producers of electronics in San Jose, Calif., sporting goods in Orange County, Calif., jewelry in Providence, R.I., shoes in West Plains, Mo., toys in Murray, Ky., and lounge chairs in Tupelo, Miss., among many other industries and communities.

Facebook Twitter Email Cancel The Parts of America Most Vulnerable to China Some areas of the U.S. were hit especially hard by China's rise, partly because those areas had lots of jobs in industries where imports surged the most. By By Andrew Van Dam and Jessia Ma Published August 11, 2016 at 11:30 a.m. ET Most-affected areas of the U.S. Colors show which areas were most affected by China's rise, based on the increase in Chinese imports per worker in each area from 1990 to 2007. Hovering over each area on the map will show a demographic breakdown of that area, below, and its most-affected industries, at right. Most-affected 20% Second-highest 20% Middle 20% Second-lowest 20% Least-affected 20% Most-affected industries tk Most-affected industries, based on number of areas* Area-wide industry effect on average resident Impact per worker* F urniture and fixtures 196 areas $44k G ames, toys, and children's vehicles 114 areas $488k S porting and athletic goods 106 areas $82k E lectronic components 87 areas $65k P lastics products 84 areas $11k M otor-vehicle parts and accessories 79 areas $12k E lectronic computers 68 areas $207k R adio and TV communications equipment 66 areas $141k H ouse furnishings 65 areas $74k H ousehold audio and video equipment 64 areas $532k F abricated metal products 56 areas $15k G irls' and children's outerwear 52 areas $105k F arm machinery and equipment 52 areas $5k W ood products 46 areas $26k M en's and boys' trousers and slacks 41 areas $8k C omputer peripheral equipment 40 areas $124k P rinting trades machinery 39 areas $365k W omen's and misses' suits and coats 39 areas $72k T ires and inner tubes 38 areas $42k R efrigeration and heating equipment 38 areas $18k T elephone and telegraph apparatus 37 areas $90k B last furnaces and steel mills 36 areas $20k M en's footwear, except athletic 35 areas $63k W omen's footwear, except athletic 35 areas $160k I ndustrial machinery 35 areas $1k M anufacturing industries 34 areas $3k I ndustrial organic chemicals 33 areas $20k H ardwood veneer and plywood 33 areas $47k N on-ferrous wiredrawing and insulating 33 areas $36k V alves and pipe fittings 33 areas $43k E lectric housewares and fans 32 areas $141k N ewspapers 32 areas $0k M en's and boys' shirts 31 areas $22k L ighting equipment 31 areas $77k S awmills and planing mills, general 30 areas $1k W omen's and misses' outerwear 29 areas $20k W omen's and children's underwear 28 areas $17k C onstruction machinery 28 areas $9k M otors and generators 27 areas $20k P aper mills 27 areas $3k M eatpacking plants 27 areas $1k M en's and boys' clothing 25 areas $20k C ommercial printing, lithographic 24 areas $1k S torage batteries 22 areas $43k F rozen fruits and vegetables 22 areas $13k I ndustrial inorganic chemicals 21 areas $9k B lowers and fans 21 areas $61k L uggage 21 areas $316k H ousehold cooking equipment 20 areas $136k F abricated textile products 20 areas $45k P ower-driven handtools 19 areas $114k F ootwear, except rubber 19 areas $246k P repared feeds 19 areas $2k S urgical appliances and supplies 18 areas $15k N itrogenous fertilizers 18 areas $34k O il and gas field machinery 18 areas $11k M en's and boys' underwear and nightwear 17 areas $19k L ogging 17 areas $0k P ressed and blown glass 17 areas $22k T ruck trailers 17 areas $10k J ewelry, precious metal 17 areas $42k W omen's and misses' blouses and shirts 16 areas $16k H and and edge tools 16 areas $20k R ubber and plastics footwear 16 areas $197k B ags: plastics, laminated, and coated 16 areas $28k H ardware 16 areas $22k C oncrete products 16 areas $9k C ut stone and stone products 16 areas $51k W aterproof outerwear 15 areas $202k M en's and boys' suits and coats 15 areas $18k C ement, hydraulic 15 areas $22k R eady-mixed concrete 15 areas $0k W omen's, juniors' and misses' dresses 14 areas $16k S oftwood veneer and plywood 14 areas $6k C anned fruits and vegetables 14 areas $10k E lectric lamps 14 areas $59k C anned and cured fish and seafoods 14 areas $54k R econstituted wood products 14 areas $8k S emiconductors and related devices 14 areas $13k M etal household furniture 13 areas $39k P ottery products 13 areas $72k G eneral industrial machinery 13 areas $22k R ubber and plastics hose and belting 13 areas $13k H ats, caps and millinery 12 areas $41k L eather gloves and mittens 12 areas $55k L eather goods 12 areas $44k C urtains and draperies 12 areas $30k C omputer storage devices 11 areas $91k M iscellaneous fabricated wire products 11 areas $15k W omen's handbags and purses 10 areas $186k B rassieres, girdles and allied garments 10 areas $60k M inerals, ground or treated 10 areas $14k F luid power valves and hose fittings 10 areas $14k S teel wire and related products 10 areas $30k C utlery 10 areas $96k C anvas and related products 10 areas $24k M illwork 10 areas $4k D ehydrated fruits, vegetables and soups 10 areas $15k P etroleum refining 10 areas $2k V itreous plumbing fixtures 9 areas $35k A luminum extruded products 9 areas $15k F abricated rubber products 9 areas $7k O phthalmic goods 9 areas $33k M agnetic and optical recording media 9 areas $32k P umps and pumping equipment 9 areas $17k S urgical and medical instruments 9 areas $6k H osiery 8 areas $7k E ngine electrical equipment 8 areas $11k F abricated plate work (boiler shops) 8 areas $5k G reeting cards 8 areas $15k B ook publishing 8 areas $7k P artitions and fixtures, except wood 8 areas $23k T ravel trailers and campers 8 areas $13k H ousehold refrigerators and freezers 8 areas $18k H ousehold vacuum cleaners 7 areas $94k L eather and sheep-lined clothing 7 areas $174k W atches, clocks, watchcases and parts 7 areas $45k P ersonal leather goods 7 areas $75k E lectrical equipment and supplies 7 areas $18k R elays and industrial controls 7 areas $14k T ransformers, except electronic 7 areas $11k I ndustrial valves 7 areas $5k P etroleum and coal products 7 areas $75k M otorcycles, bicycles and parts 7 areas $119k E lectrometallurgical products 7 areas $91k M edicinals and botanicals 7 areas $76k M ining machinery 7 areas $15k A nimal and marine fats and oils 7 areas $7k C ostume jewelry 7 areas $51k O ptical instruments and lenses 7 areas $39k W ood kitchen cabinets 7 areas $5k B rooms and brushes 6 areas $54k C urrent-carrying wiring devices 6 areas $17k A pparel and accessories 6 areas $32k P rinted circuit boards 6 areas $14k G um and wood chemicals 6 areas $21k I ndustrial trucks and tractors 6 areas $13k B oat building and repairing 6 areas $2k T ransportation equipment 6 areas $7k F ood preparations 6 areas $2k P rimary non-ferrous metals 6 areas $9k T extile machinery 5 areas $31k F abric dress and work gloves 5 areas $44k I norganic pigments 5 areas $23k D ie-cut paper and board 5 areas $40k M etal doors, sash and trim 5 areas $7k P lastics materials and resins 5 areas $5k A ir and gas compressors 5 areas $24k M usical instruments 5 areas $39k P ens and mechanical pencils 5 areas $49k A luminum sheet, plate and foil 5 areas $9k C ordage and twine 5 areas $22k H ousehold appliances 5 areas $29k I nternal combustion engines 5 areas $5k P rimary aluminum 5 areas $6k S earch and navigation equipment 5 areas $4k E lectronic coils and transformers 5 areas $18k A brasive products 5 areas $13k C hemical preparations 5 areas $6k Demographics of the most-affected areas They were whiter, less educated, older and poorer than most of the rest of America. The bars below show those demographics by percentage of the population. Below 150% of the poverty line At least 50 years old High-school education or less Non-Hispanic whites 24.5 24.8 25.4 27.1 27.6% 32.5 32.9 34.0 34.3 35.5% 40.5 40.9 41.2 45.3 45.6% 58.4 62.2 64.7 67.3 72.7% Middle 20% Second-highest 20% Second-lowest 20% Least-affected 20% Most-affected 20% *Number of areas is based on the number of commuting zones where each industry was among the five most-affected industries. Commuting zones are groups of counties that share a labor market, similar to a metropolitan area. †Impact per worker means that U.S. workers would have produced that value of goods if those goods had been made in America instead of China. The analysis excludes Alaska and Hawaii. Education level is measured only for those age 25 and over. Poverty-status calculations are for individuals, and exclude those in college dormitories and military housing, as well as institutionalized people and children under age fifteen who aren't related to a householder or other reference person. Graphic by Graphic by Andrew Van Dam and Jessia Ma Additional reporting by Jon Hilsenrath and Bob Davis Sources: David Autor and Brendan Price of the Massachusetts Institute of Technology; Gordon Hanson of the University of California, San Diego; David Dorn of the University of Zurich Customer Service

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“If we encouraged China to trade, we needed domestic policies in place that would minimize the impact that would follow,” says Gordon Hanson, a University of California, San Diego economics professor. He calls the lack of such policies “a catastrophic mistake.” A group of economists that includes Messrs. Hanson and Autor estimates that Chinese competition was responsible for 2.4 million jobs lost in the U.S. between 1999 and 2011. Total U.S. employment rose 2.1 million to 132.9 million in the same period. In the 2000s, congressional districts where competition from Chinese imports was rapidly increasing became more politically polarized, the two researchers and two coauthors concluded from examining vote totals. “Ideologically strident” candidates replaced moderates, they wrote in a paper. In this year’s Republican presidential primary races, Mr. Trump won 89 of the 100 counties most affected by competition from China, according to an analysis by The Wall Street Journal. Those counties include Hickory’s Catawba County, where Mr. Trump got 44% of the Republican vote in the March primary against 11 other candidates. Mr. Sanders won Democratic primaries in 64 of the 100 most-exposed counties in northern and Midwestern states. That pattern didn’t hold in the South, where Hillary Clinton was strong among black voters.

Hickory, a quiet city of about 40,000 people, used to have a smell redolent of wood lacquer. It was a boomtown in the late 1990s. Foreign competition challenged the local apparel industry, but furniture thrived. Furniture makers figured they were relatively safe from imports because their products were bulky, expensive to ship and often involved hand-craftsmanship. Then shipping costs fell, and many Americans chose low prices above all else. Manufacturing employment in Catawba County and surrounding areas shrank to 38,000 in 2014 from 79,000 in 2000. Nearly half the decline was caused by lost furniture jobs. Last year, total U.S. imports of furniture and fixtures from China reached $20.4 billion, up from $4.4 billion in 2000, the Census Bureau estimates. Especially hard hit were communities in North Carolina, Virginia, Tennessee, Iowa and Wisconsin. The U.S. now imports 73.5% of all furniture it consumes, according to Jerry Epperson, an analyst at investment bank Mann, Armistead & Epperson Ltd. in Richmond, Va. More than half of that percentage comes from China. “We were all pretty surprised by the speed,” says Alex Bernhardt Jr. , chief executive of Bernhardt Furniture Co., a family-owned manufacturer based in Lenoir, N.C., about 17 miles from Hickory. Mr. Bernhardt and other furniture makers say they inadvertently helped China by dispatching technicians to its factories to offer guidance. American furniture companies also sent tools, parts and instructions to China to build intricate, machine-made products there. Alex Shuford, the chief executive of Century Furniture’s parent company, at his office in Hickory, N.C. The help U.S. furniture makers gave China ‘was like Ford helping Toyota,’ he says. Photo: Mike Belleme for The Wall Street Journal Alex Shuford, 42, the CEO of family-owned RHF Inc., which owns Century Furniture and is based in Hickory, says the help U.S. manufacturers gave China “was like Ford helping Toyota . ” Century and Bernhardt survived by focusing their U.S. production on made-to-order goods, especially upholstered furniture. Bernhardt now has 1,600 employees in North Carolina, down from 2,800 in 2000, while Century has shrunk to 845 workers in the state from 1,323 in 2003. U.S. policies to deal with Chinese trade failed, including efforts to collect import duties. In 2004, a coalition of furniture makers won a trade case against China and collected $309 million in tariffs. Stanley Furniture Co. , of High Point, N.C., received the biggest payout, which totaled $83.5 million, but had just 71 workers left in the U.S. as of last year, compared with 2,600 a decade earlier. Stanley spent heavily on a U.S.-made line of children’s furniture, but it flopped. “We invested millions in the effort to save jobs,” says Stanley President and Chief Executive Glenn Prillaman. Stuart Shoun, the Hickory machinist, says he was a 20-year-old “hillbilly” in search of steady work when he moved to Hickory from Mountain City, Tenn., in 1977. Roads to jobs in Hickory were called the Hillbilly Highway. When layoffs hit, Mr. Shoun was surprised some coworkers asked for help deciphering instructions because they couldn’t read or write. “How would they even go and fill out [job] applications?” he recalls thinking. He was recruited to run a furniture plant in China and could have doubled his salary to about $100,000. “The offer said to me: ‘You might want to get out of North Carolina and go to China because that’s where the industry is going,’ ” he says. He didn’t want to leave his family and turned down the job. During earlier import surges, American cities and workers remade themselves. Detroit rebounded from Japanese competition in the 1980s, with auto maker Chrysler and leader Lee Iacocca emerging as symbols of American revival. Chrysler is now part of Fiat Chrysler Automobiles NV. Laid-off workers adjusted more slowly to the China shock. In Hickory and across the U.S., fewer uprooted themselves in search of job opportunities elsewhere, migration data show. Economists cite the increase in two-income families, the aging population, housing bust and skyrocketing housing costs in places such as San Francisco and Austin, Texas. Government efforts for laid-off workers haven’t helped much. Washington’s formal program to retrain workers hurt by import competition, called Trade Adjustment Assistance, pays for two years of college tuition and extends unemployment-insurance payouts. A 2012 evaluation ordered by the Labor Department found that program participants, especially those older than 50, generally made less money four years after starting the program than those who didn’t sign up. The others went back to work more quickly. Mr. Shuford, Century’s chief executive, calls the job-relief program a “Band-Aid for an economy that has a sliced artery.”