The decline in manufacturing employment is not limited to the U.S. Since 2000, China has lost over 4.5 million manufacturing jobs. In fact, nine of the top 10 manufacturing countries, which produce 75 percent of the world's manufacturing output (the U.S., Japan, Germany, China, Britain, France, Italy, Korea, Canada, and Mexico), have lost manufacturing jobs but their manufacturing output has risen.
Despite the pretense of being a free trade nation, the U.S. has significant barriers to trade that come in the form of tariffs, quotas and steep regulatory barriers. Our restrictions are just not as onerous as many other countries but there's a push to make them so. It's simple politics. The people who face foreign competition, say management and workers in the auto industry, are well organized, have narrowly shared interests and the resources to have considerable clout in Washington to get Congress to enact trade barriers. Restricting foreign competition means higher prices for their products, and hence higher profits and fuller employment in their industry. The people who are benefited by foreign competition, say auto consumers, have widely dispersed interests; they are not organized at all and have little clout in Washington. You never see consumers descending on Washington complaining about cheap prices for foreign products; it's always domestic producers who do the complaining.
The relationship between prosperity and economic freedom, including free trade, is a no-brainer. But if you need hard evidence, check out the Heritage Foundation's "Index of Economic Freedom". You'll find that nations having the greatest measure of economic freedom are the most prosperous and peaceful.