This Reporter Says Education, Not Trump Policies, Are Saving Small Town USA

CHRISTIANE AMANPOUR: Now, President Trump is due to meet China’s Xi Jinping in Beijing this week. It’s the first visit by a U.S. president in nearly a decade. For the world’s two largest economies and militaries, trade will likely be high on the agenda. After their intense tariff war last year, which ended in a truce. Journalist Bob Davis has been keeping a close eye, and he joins Hari Sreenivasan to discuss what a small town’s recovery from the impacts of Chinese imports reveals about the United States economy.

HARI SREENIVASAN: Christiane, thanks. Bob Davis, thanks so much for joining us. You have been covering US and China, sort of economic relations and fallout from trade wars for a long time. Your recent piece took you back to Hickory, North Carolina, a town you’ve followed over time. You’ve seen these different cycles at work. Tell us a little bit about Hickory. What drew you to it over the years?

BOB DAVIS: Well, my first visit was in 2016 when the journal was trying to figure out – and everybody else – you know, the Trump phenomenon. And part of it clearly was, you know, a populist revolt or rebellion, and China played a big part of that. So we were looking for a place to set a story, and Hickory just was wind up to be a perfect candidate, journalistically speaking. It was a small city, 30,000 people or so in the Southeast, which was where the impact of China was felt enormously. They tended to be small cities in the Southeast and the Midwest that had a single industry, and Hickory’s industry was the furniture industry. It was at one time kind of the furniture capital of the US.

SREENIVASAN: So, how is it different today?

DAVIS: Well, you know, back then we were looking, as I say, for the impact of China. What was truly interesting to me, and these people, you know, had worked in the furniture factories for years and years, and many of them had come from different parts of the country to work in Hickory over what were called the hillbilly highways. You know, the main highways from Tennessee, West Virginia and so on, and looked like, you know, really good jobs, and they were really good jobs. And Hickory, in 2000 or so, the median income was higher than the national average. The unemployment rate was lower than the national average.

But after China joined the WTO in 2001, the impact was enormous and immediate. And unemployment shot up. People were laid off constantly. Furniture factories were closing left and right. You know, and the interesting thing was, I go and I talked to workers there, and I’d say like, so what do you think happened? And if I asked them specifically a question about China, they would go off on China. But mainly what it was – without asking, if I would just ask in an open-ended way – the first thing they would say is they blame their bosses. They blame their bosses for selling out, selling out to the Chinese. They could understand why China would come in and, you know, sell, but it was their bosses that they blamed. And it was a very, it was the kind of thing that Donald Trump and also Bernie Sanders picked up on.

SREENIVASAN: So really, that economic frustration translated into political identity.

DAVIS: Yes, definitely. Without a doubt.

SREENIVASAN: In your recent piece you wrote, “the town is making a comeback. The jobs are returning and incomes are rising, but the reasons have nothing to do with Mr. Trump and his signature policies.” Explain.

DAVIS: Well, that’s right. So, as I say, this was a single industry town, furniture industry. The furniture industry figured out a way to survive with China, but at a much, much reduced level. I think the employment of furniture there is maybe a third of what it used to be, but again,it still exists. So the jobs aren’t coming back in the furniture industry. What happened, in general, was that the people who worked in the furniture factories tended to stay, you know, they didn’t have a lot of options elsewhere in the country, and they have family connections there and all that. And essentially they got older. Some, a lot of them, a fair percentage of them went on disability because they did a lot of factory work and might have wrenched their backs or whatever. But, you know, they went on Social Security, Medicare, Social Security disability. Federal money comes into the town and that creates a demand for services for older people. So healthcare in particular, but other services as well. So the area is definitely staging a recovery, no doubt. You know, jobs there are increasing, unemployment rate is lower. But they aren’t jobs in general in manufacturing. They’re jobs and services, and many of those jobs are filled by immigrants, or the children of immigrants who lived in Hickory, but were too young, you know, in the early two thousands to get a job.

SREENIVASAN: So if they’re not the same type of jobs, are they paying the same? And if – I mean, is it physical labor? Is that why there are different sort of demographics that are signing up?

DAVIS: The service jobs in general tend to be, tend to pay less than the manufacturing jobs. I mean, some service jobs of course, don’t. If you’re a nurse or, I don’t know, a dental assistant, you make considerably more than most factory workers do. But, you know, a home health aide or something will, you know, are not highly paid jobs. And the people who, again, who tend to gravitate to those jobs are immigrants or the children of immigrants. Now, if you look at the factory jobs themselves, even they also rely much, much more on immigration and back, gosh, in 1990 or so, there were hardly anybody who was foreign born in that part of the world, And now – it used to be less than 1%. Now it’s 10% of the of the population is foreign born. That’s much lower than the national average, but a substantial, enormous, you know, increase from what it used to be. And the people who go into manufacturing now tend to be the same sort of people, because again, if you grew up in Hickory and your father was laid off and your uncle was laid off and your mother was laid off, the last thing you wanna do is to go into manufacturing. Some do, of course, but it tends to be people who don’t have that kind of history.

SREENIVASAN: Yeah. Well, one of the things that you always hear when these sorts of changes are coming is that there will be efforts to retrain, that factory workers will be able to get new jobs, different jobs. Considering that you’ve watched that over the last decades, is that happening?

DAVIS: Yeah, it’s an interesting question. So again, this is an early visit. So I would be talking to the workers who’ve been laid off, you know, time and again. And there was at that time a program called Trade Assistant – Trade Adjustment Assistance, rather. It was basically money, enough money to go to community college. And the community college there is very good, you know, in terms of retraining workers for any number of jobs. But, so I’d ask people, you know, how did that work out for you? And this would be, they’re talking around 2006, 2007. So the first thing is, these often are people who didn’t wanna go to college in the first place. So a lot of them got scared off, you know, particularly with the math that you had to learn. So that was one. And then, again, it’s 2006, 2007. And they think to themselves, what are the booming industries? Well, house construction, housing was gigantic at that time, so they trained themselves on housing, and then the housing market collapsed. So it is a very difficult thing to do, and the US is frankly terrible at it. Some of the European countries are good at retraining, but the US has never put enough money into it and never figured out how to, you know, give people the kinds of skills that they really need.

SREENIVASAN: So currently the president talks a lot about how imposing tariffs on China, taking a harder line against China, will bring back American manufacturing. Treasury Secretary Scott Bessent has said that they’re intended to revitalize the US industry and that factories are gonna be breaking ground. Is that happening in Hickory?

DAVIS: There’s a 25% tariff on furniture from anywhere, anywhere outside the country. Right. So it’s an incentive, certainly an incentive to move to the US and get under that tariff umbrella. But for the local surviving furniture companies, it hasn’t really been a plus at all. I mean, what they will say to me is that first of all, their tariff bill has gone up enormously. These are very low margin kind of businesses. 5% before taxes is considered a good year.

And then the way these furniture companies in general adjusted to China was to move into niche markets that the Chinese can’t supply. So, you know an expensive piece of furniture with a hundred different choices, you know, small production runs. So this one particular company called Century Furniture makes $7,000 sofas. They thought, you know, 25% tariffs not gonna scare away their customers, but what happens is they sell through furniture retailers a lot, a lot of what they sell. And those retailers rely on sales of thousand dollar couches. And for people buying those kind of couches, 25% means a big deal. So they’re worried that their customers are gonna go outta business, and that would hurt them much more than any benefit they might get from, you know, protection by the tariffs.

SREENIVASAN: And what about all the parts that go into the sofa? Some of those come from overseas in the first place, right?

DAVIS: Yeah. Yeah. You can get a piece of furniture that’s American made, but it’s got metal parts, and it’s got a part from this country and that country. So it’s also, you know, hundreds of hours trying to figure out, so how much do we owe? You know, and now there are refunds. They are, this particular company, and others also, are applying for refunds. But first of all, you don’t know how much they’re gonna get. And then pretty, you can presume that retailers are gonna ask for a refund also. And then the company says to me, well, you know, it’s the customers that really should get the refunds, and are the retailers gonna really call you up and say, you know, I owe you 50 bucks? I doubt it. So it becomes a complicated equation also.

SREENIVASAN: You know, I wonder if this transition from factory work to healthcare is gonna be something that happens in other parts of the country as well. I mean, we’ve got this silver tsunami, we’ve got this aging population that’s gonna need all kinds of services. And regardless of where you live in America, there are gonna be necessary jobs in those markets.

DAVIS: Well, it’s already happening. I mean, when you see the unemployment, one of the questions is why the unemployment rate’s so low, you know, given the challenges that we have – you know, with the Iran War and other things – is one of the reasons is healthcare is expanding enormously. I mean, it is a legitimate question is, you know, is an economy that is focused entirely on taking care of older people, like an economy that you, you know, that you really want or that you depend on? It’s a totally legitimate question. And places like Hickory are unlikely to be the places that will spawn new industries. You know, I mean, they make it, they’ll get data centers, you know, from AI and other data communications. But they’re not gonna be the place where people are going to be working on AI. Those will be, it might be Charlotte nearby, you know. Places with research universities tend to be the places that’ll support new industries.

SREENIVASAN: Given the kind of different variables that you’re saying are necessary for, you know, healthy transitions like, let’s say for example, a research infrastructure, a big university. Right now, we’ve seen a lot of those universities suffer cutbacks in research funding from the federal government. You’re talking about an immigrant labor pool and population. There’s trepidation in certain communities about how ICE is going to come to their town, or what they’re gonna do and how they’re gonna disrupt it. Employers are talking about that. So I wonder if there, you know, the policy prescriptions that we have right now, that the administration’s putting out, will, over time, you’re gonna see these other kinds of effects on a place like Hickory or even a bigger place where there were these possibilities for sort of these green shoots, but some of these policies are kind of stopping that.

DAVIS: Well, I think the research question is the biggest self-inflicted wound. I mean, it’s frankly crazy. You know, I mean, the United States is a leader in any number of technologies, which can lead to, you know, new industries. And the idea of, you know, beating up on these universities because of issues about diversity and equity and so on, when clearly that’s not the research part of those universities is just frankly, crazy, you know, and will really hurt the United States if it continues.

On the immigration question. It was interesting. I happened to be in Hickory, I don’t know, a week or so after Border Patrol was there for one day. You know, they would stop, you know, at a Mexican restaurant or whatever. And just that one day sent, you know – I’m hesitant to use the word terror, but that’s kind of the way that people felt. They were really, really frightened. And, you know, people who are citizens, started carrying passports. You know, people started carrying papers. The local Hispanic aid group, you know started making deliveries ’cause people were afraid to come to the food pantries. And that was from one day. One day, you know? And these factories do depend on a supply of workers. And yes, I think it will, it will wind up hurting places of that sort.

SREENIVASAN: You know, we’re having this conversation on the eve of a meeting between President Trump and China’s Xi Jinping, and, you know, what are the things that would help a place like Hickory? And are those things going to be on the agenda, so to speak? Is that where America is thinking?

DAVIS: The import impact from China has kind of washed over the United States. I mean, one of the things the United States trade representatives – Democrat or Republican, legitimately complain about is the Chinese model. It’s an interesting model. It is, on the one hand, unbelievably competitive. You know, like in the EV area, hundreds of companies competing. And they get really good at it. They’re, you know, quite innovative. Their factories are very, very modern. But what keeps the system going are enormous subsidies. You know, in a capitalist system, a totally capitalist system, you know, you’d have a – I don’t know – you start with 50 companies, you’d wind up with three because they’re making cars. And there, what happens is companies stay in business all the time.

So the result is they produce very good products, but at very, very cheap prices at money losing prices. And those products that are unprofitable at home get exported overseas. And even if they may lose a little money overseas, it reduces, you know, the production cost per unit. And also they tend to do better, you know, even at prices that local competitors might complain about. It might be somewhat profitable for these companies. So it has long been a urging of the United States for China to shift its economic model so that it depends less on exports and more on filling demand for the, you know, 1.4 billion people who live there.

So it hasn’t helped so far. I mean China has resisted all those complaints and feels that yeah, you know, we’re doing pretty well with the system we have. So that could be on the agenda, but I think the Trump team has largely given up on that, you know, and is looking for a way to instead come to some agreement that you’ll only ship certain products at a certain volume and we’ll ship certain products at a certain volume. Will that help Hickory? I don’t honestly know. I mean, maybe a little bit. But it also has all the downsides of protectionism too, which the main one is, you reduce competition and innovation.

So I’m not sure that what will come out of this, you know, this summit will have much effect on average Americans. I think it’s much more on us to develop the programs and policies of our own that will help, you know, help the United States.

SREENIVASAN: Journalist and author Bob Davis, the book that he wrote about this was “Superpower Showdown.” Thanks so much for your time.

DAVIS: Thank you.