Protectionism and Free Trade

The trade deficit has increased since President Trump took office, consumer prices are rising, and American industries are losing their competitiveness on the world stage.

Even if Trump and Xi both desire to reduce America's trade deficit with China, it's unlikely it will shrink in the short term.

It is the lethal combination of tariffs and the end of the expansionary phase of the credit cycle which should concern us.

It is not "the US" that imports Japanese or Chinese electrical appliances, but an individual from the US, or a group of Americans. They import these appliances because they believe that a profit can be made. And governments ought not interfere in these transactions.

Tariffs inflict harm on real people, empowering bureaucracy and the state, while destroying the rights of real-world entrepreneurs and consumers. Yet, some people claiming to support free markets are perfectly fine with this.

The evolution of global trade over the last decades has thus been influenced to a significant and yet unrecognized extent by the expansionist monetary policies of governments around the world.

Government injection of funds into trade finance prevents interest rates to rise, deepening malinvestments and precluding the readjustment of international trade after a crisis.

Thanks to trade with the Chinese, more Africans have access to safe food they would otherwise lack.

The right to trade with foreigners without government interference is a God-given fundamental human right, not morally subject to the whims of those who want trade wars to protect their own interests.

Mises’s insight into the importance of Cantillon effects can be further extended to explain not only income and wealth inequalities among individuals but also some rather curious developments in global industrial organization over the last few decades.