World Trade Grows Without the U.S.

Other nations are busy expanding commercial ties, as the U.S. economy is increasingly isolated

By Phil Gramm and Donald J. Boudreaux. Excerpts:

"After President Herbert Hoover signed the Smoot-Hawley Tariff Act in 1930, 25 countries imposed retaliatory tariffs"

"the real value of world trade plummeted by more than 65% between 1929 and 1933."

"fear that under the gold standard, countries hit by U.S. tariffs would have to settle their trade deficits in gold, depleting their gold reserves and money supply"

"Governments no longer have to worry about trade deficits causing deflation."

"Our 10 largest trading partners on average export and import 55.5% more of their gross domestic product than the U.S. does."

"Canada has responded to U.S. tariffs by launching a trade expansion effort, including a meeting between Mr. Carney and Xi Jinping"

"Dramatic improvements in transportation and communications have made it much easier for exporters and importers to find alternative markets"

"The rise of small-volume carriers such as FedEx, UPS and DHL along with the significant fall in freight rates have made trade diversion and diversification easier and more profitable. As important, the cost of instant international communication and search has fallen to near zero."

"Chinese exports to the U.S. fell by 69% from February through September, but Chinese exports to other regions rose."

"China will close out 2025 having exported 8.3% more than last year"

"U.S. exports, by contrast, are projected to fall next year by 3.4%."

"Before tariffs, well over half of U.S. imports were inputs used by American producers." 

"Obliged by Mr. Trump’s protectionism to produce goods we could buy cheaper abroad and shielded from the competition that drives peak performance, U.S. producers will become less efficient and less competitive on the world market."