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Exports are Costs; Trade’s Ultimate Benefits Come in the Form of Imports

Here’s a letter to the Washington Post:


You rightly criticize both Democrats’ and Republicans’ increasingly tight embrace of protectionism (“A bipartisan retreat on trade,” August 2).

Donald Trump, of course, is a protectionist of the most cartoonish sort. Unfortunately, the pronouncements of Elizabeth Warren, Bernie Sanders, and many other Democrats reveal them to be, on trade, identical to Trump: they all believe that a nation’s gains from trade consist in the amounts that it exports, and that imports are costs that a nation must endure in order to secure maximum opportunities to export.

This understanding, although popular, is backwards. In reality, exports are costs and imports are benefits. In a sane world, we would seek to secure as many imports as possible in exchange for as few exports as possible. Too bad that we’ve no one today with the eloquence of John Stuart Mill to explain why:

We are continually calling ourselves a trading nation; and we boast of our commerce, no doubt very justly, as one of the grand sources of our wealth. Yet, who ever heard of a commerce which was not mutual? How can we expect to export without importing? or of what advantage would it be to us if we could? since, demonstratively, it is the imports alone, from which the benefit of foreign commerce is derived. Nobody is enriched by giving any thing away. Should we grow rich by exporting all that we have, and importing nothing? How truly, then, do we misunderstand our own interest, if we attempt to sell our own commodities to foreigners, and yet refuse to take theirs in exchange!*

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

* John Stuart Mill, “The Corn Laws” (1825), reprinted in Essays on Economics and Society Part I, which is volume IV of The Collected Works of John Stuart Mill (Indianapolis: Liberty Fund, 2006), page 67.