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On the National-Security Exception to a Policy of Free Trade

Here’s another letter to “proud Trump man” Nolan McKinney:

Mr. McKinney:

Applauding Trump’s sanctions against Huawei, you “continue to be impressed by our President’s resolve to ensure national security by clamping down on trade with China.”

I continue to be impressed by our president’s confusion.

Consider Trump’s sanctions against Huawei. To manufacture its cellphones, that company buys many inputs made in America – inputs that, thanks to Trump, Huawei will no longer be able to buy from American producers.

With one breath, protectionists assert that when the U.S. government obstructs American imports of key manufacturing inputs – and thereby encourages greater production of these inputs by American firms – it enhances U.S. military might. Yet now we hear from these same protectionists that when the U.S. government obstructs Chinese imports of key manufacturing inputs it diminishes Chinese military might. How can both claims be true? If reducing the flow of key inputs into the U.S. strengthens national security in the U.S., won’t reducing the flow of key inputs into China likewise strengthen national security in China?

Also, if breaking down foreign trade barriers helps to increase the strength of American producers by expanding their markets, aren’t American producers such as Cirrus Logic, Intel, and Micron Technology – who supply many of Huawei’s inputs – harmed by the shrinkage of their markets brought on by Trump stopping these firms from selling to Huawei? And won’t this harm to American companies potentially compromise U.S. national security?

Logically, there does exist a national-security exception to the case for free trade. Yet practically, this exception must be treated with enormous skepticism, especially when it’s used to justify trade restrictions imposed by an administration whose capacious ignorance of the economics of trade is matched only by its long-standing craze for protectionism.

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


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