WASHINGTON — The path to a manufacturing revival in the U.S. lies with the government taking steps to reduce the trade deficit by pursuing new investment policies for manufacturing and pressuring countries to eliminate currency manipulation, a report released Thursday by the Economic Policy Institute said.

EPI, a nonpartisan think tank, suggested that a new national manufacturing strategy combined with action to eliminate currency manipulation could create an estimated 620,000 to 1.3 million manufacturing jobs, reduce the U.S. goods trade deficit by $190 billion to $400 billion over three years and increase U.S. gross domestic product by $225 billion to $473.7 billion.

“To grow jobs and boost the economy, we must eliminate the trade deficit,” said Scott Paul, president of the Alliance for American Manufacturing. “Ending currency manipulation will get us part of the way there, but we also need a smart manufacturing policy, one that focuses on innovation, public investment, skills and trade enforcement.”

The manufacturing sector has been hit hard in the past decade. Between March 1998 and February 2010, the U.S. lost 6.1 million manufacturing jobs, according to government data. Manufacturing employment began to rebound between February 2010 and last month, gaining roughly 500,000 jobs during that time.

Apparel and textile manufacturing in the U.S. has also lost tens of thousands of jobs in the past decade as companies have moved the bulk of offshore production to low-wage countries. However, there has been some movement in recent years to bring apparel production back to the Western Hemisphere due to rising costs in China.

The EPI’s new report said the single largest action needed to reduce the trade deficit is elimination of currency manipulation. If the U.S. is able to pressure countries, particularly China, to let their currencies appreciate, U.S. textile and apparel manufacturing stands to gain new jobs, the report said.

Textile and apparel manufacturing could gain between 46,600 and 98,100 jobs by 2014 if currency manipulation is eliminated, the report said. It also outlined other industries that stand to gain jobs.

Sen. Sherrod Brown (D., Ohio) said on a conference call on the report that he plans to reintroduce a bill this year targeting currency manipulation that passed the Senate in 2011 but stalled in the House. The bill would direct the Commerce Department to treat undervalued currency as an illegal export subsidy under U.S. trade laws, which could lead to punitive tariffs on imports from China and other countries.

Brown also praised President Obama’s proposals to boost U.S. manufacturing.

“It is important to support the National Network for Manufacturing Innovation,” Brown said. “It is the administration’s proposal to establish the kinds of public-private partnerships focused on manufacturing, from workforce training to technology. It will have enormous dividends in terms of investments and jobs.”


Obama made the $1 billion proposal in 2009 to encourage “insourcing” and support investment in the manufacturing sector. The aim was to build a network of up to 15 institutes for manufacturing innovation. The public-private partnerships would serve as regional hubs of manufacturing to help manufacturers become more competitive.