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Here’s a letter to a new Cafe Hayek reader:
Mr. David Epstein
Mr. Epstein:
Thanks for your e-mail.
With respect, I disagree that Pres. Trump’s expression of desire for a world of zero tariffs “proves that he is a free trader at heart.” While recognizing the desirability of a world of zero tariffs is a necessary characteristic of all true free traders, it is hardly a sufficient characteristic. A genuine free trader supports a policy of free trade at home regardless of the trade policies of other governments. That is, the appellation “free trader” applies only to those who support a policy of what is, perhaps confusingly, called “unilateral free trade.”
Pres. Trump obviously is no proponent of unilateral free trade. For years, every word out of his mouth about trade has revealed him to be an unreconstructed mercantilist. To their credit, mercantilists do not advocate autarky; they support international trade. But mercantilists support international trade for a reason wholly different from free-traders’ economic reason for supporting international trade. Mercantilists see international trade as a means by which the home country acquires more money for accumulation; free traders see international trade as a means by which the home country acquires more goods and services for consumption.
It’s perfectly reasonable for a mercantilist to call for a world of zero tariffs if that mercantilist believes that, with a move to zero tariffs worldwide, the resulting increase in his country’s exports will exceed any increase in his country’s imports. Given all that Trump has ever said about trade, it is clear that, if Trump really does want a world of zero tariffs, he predicts that such a world would be one in which the value of American exports consistently and significantly exceeds the value of American imports.
But not only is Trump’s prediction about the outcome of zero worldwide tariffs almost certainly mistaken, his desired outcome – namely, that we Americans produce as much as possible for the consumption of non-Americans while we Americans receive from non-Americans as little as possible for our own consumption – is regarded by all true free traders as utterly undesirable.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030