About the author
Mark Perry Tweets
What’s New on AEI
Sign up for AEI Today
The whole point of free trade is that it’s NOT fair….
View related content: Carpe Diem
….. is the title of a Forbes op-ed by University of Georgia economist Jeffrey Dorfman, here’s the “money slice” (my emphasis):
The entire point of trade is that the process is not fair. It is the trade which looks the most unfair that creates the most benefits because the potential gains are the largest.
We accept specialization of labor, trade, and resulting bilateral trade deficits and surpluses as a normal part of life at the micro level, implicitly recognizing the benefits inherent in the system of trade. As individual shoppers, we are happy when someone offers us a product on sale, even a sale so deep that the seller is losing money. Yet when imported products offer a great price to an entire nation of consumers, suddenly a sale is “dumping” or “state subsidies” and the unfair competition from imports must be offset with consumer-harming tariffs.
Valid arguments can be made to preserve certain industries for spillover effects, national security, or other motives, but those cases are rare and certainly do not include solar panels or washing machines. Instead, tariffs are best understood as taxes on consumers to provide benefits to a favored subset of workers and business owners. Such market interference leaves all impacted countries worse off by reducing specialization. International trade is not a sports competition where an even playing field is a must. Rather, cost differences and specialization create the gains from trade. The whole point of free trade is that it’s not fair.