Make Trade Free Again

By Samuel Gregg. Excerpts:

"The US economy’s well-being is never far from most Americans’ minds. That is one reason why advancing the free trade case to Americans today should be heavily focused on how trade liberalization contributes substantially to bolstering America’s economy: i.e., reducing import barriers, diminishing export subsidies, and limiting opportunities for the government to use economic carrots and sticks to direct trade between America and other nations. The result is greater wealth and overall economic welfare for Americans in the long term.

The evidence for this is frankly overwhelming. We know, for example, that trade liberalization accelerates GDP growth. Back in 2008, a World Bank analysis of trade’s impact upon growth estimated that, between 1950 and 1998, “countries which liberalized their trade regimes experienced annual average growth rates that were about 1.5 percentage points higher than before liberalization.” A more recent International Monetary Fund 2017 study of the trade-growth relationship illustrated how trade across borders significantly contributes to increases in per capita income. It estimated that “a one percentage-point increase in trade openness raises real per capita income by 2 to 6 percent.”"

"Such competition can be unsettling for American businesses and workers alike. The alternative, however, is an America cowering behind tariff walls, pretending that people abroad aren’t willing to work as hard or harder than Americans, and imagining that foreigners will somehow be magically less innovative than Americans. It also involves deluding ourselves that politicians and technocrats can know how to engineer the optimal makeup of a $26.8 trillion economy both now and into the future via tariffs and industrial policies. Lastly, it means Americans are denying that most expressions of economic nationalism are really about promoting sectional interests and have little to do with 330 million Americans’ long-term economic welfare."

"If US trade policy shifts decisively in economically nationalist directions, Washington will be seen by friendly and non-aligned nations alike as no longer interested in modeling an alternative vision of international political economy to, say, China’s neomercantilist policies. By contrast, a strong American return to the trade liberalization game would send a quite different message to the world and deliver considerable benefits to America. As the foreign policy analyst Mike Watson writes, “Offering greater access to American markets would counteract China’s economic influence, [and] make friendly and neutral countries more prosperous and less vulnerable.”"

"Put another way: if the United States can steel itself to make trade free again, Americans as individuals and America as a nation will win in the long term while special interests and their armies of DC lobbyists will lose. That’s good news for America’s future economic prosperity but also for the well-being of the republic as a whole."