≡ Menu

Ross Is Wrong Yet Again on Trade

Here’s a letter to the Wall Street Journal:

You rightly denounce what you call “Trump’s Trade Confusion” (May 25). Confirmation of that confusion is Commerce Secretary Wilbur Ross’s recent declaration that “there is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry.”

Ignore the question of whether or not Mr. Ross’s statement about the auto industry is correct empirically. Focus instead on the fact that he apparently doesn’t realize that ‘eroding’ domestic industries that compete against imports is precisely what free trade is supposed to do. When we import goods at prices lower than the costs we’d incur to produce those same goods, we spend fewer resources at home producing those particular goods and, thus, devote more resources at home to the production of goods and services that, without those imports, we’d be unable to produce. It follows that when our government obstructs our ability to buy imports, our government – by thereby denying other domestic industries the resources they need to flourish – does just what Mr. Ross decries, namely, erodes particular domestic industries.

Yet there’s a huge difference between the erosion of particular domestic industries caused by our purchases of imports, and the erosion of particular domestic industries caused by our government impeding our purchases of imports: in the former case resources move from less-productive to more-productive uses (thus fueling economic growth) while in the latter case resources move from more-productive to less-productive uses (thus stifling economic growth).

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030


A good textbook in the economics of international trade could be written simply by quoting the stream of statements made by Trump and his trade triumvirate on trade and then, after each quoted conclusion, write “Not!