Here’s a letter to a correspondent who doesn’t understand what he calls my “refusal to come to grips with the reality of trade.”
Thanks for your e-mail.
You “can’t see why we should have free trade when our exports encounter obstacles in other countries.”
Suppose that in the sea surrounding Hong Kong (a jurisdiction that pursues a policy of free trade) a titanic earthquake strikes. This earthquake greatly transforms the sea floor. The result is a change in ocean currents such that cargo ships have a much more difficult and costly time entering Hong Kong’s harbor. In this example, nature – rather than any government – imposes an obstacle to the entry into Hong Kong of our exports.
Do you believe that the people of Hong Kong would be enriched by this nature-imposed tariff? More to the point, do you believe that this nature-imposed tariff in Hong Kong would justify a government-imposed tariff in the U.S.?
If you’re correct that we should not pursue a policy of free trade when American exports encounter obstacles when entering other countries, then you should agree that such an unfortunate earthquake in Hong Kong would justify the imposition by the U.S. government of punitive taxes on American purchases of imports from Hong Kong.
And if you do agree that this earthquake would justify American tariffs, then do you also agree that the vastness of the ocean itself justifies tariffs? After all, if the ocean separating Hong Kong from the U.S. had a width of (say) only 72 miles, rather than 7,200 miles, American exports to Hong Kong would encounter a much lower obstacle.
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