Free Trade is for Patriots

Free trade isn’t anti-American. It makes us a more competitive and fairer nation.

FILE - In this Friday, Feb. 17, 2017, file photo, an American flag hangs on the front of the New York Stock Exchange.

By Samuel Gregg Published on March 27, 2017

Over the past four years, Americans have turned against free trade. A majority now see free trade as bad for America. The biggest growth in anti-free trade feeling has occurred among Republicans and conservatives.

There are many reasons for this shift. For one thing, not all Americans immediately win from the opening of markets. Another problem is free trade’s politically-poisonous association with the Davos internationalista set.

It’s vital for those who believe in free trade to ground this belief in love of country.

That’s why it’s so vital for those who believe in free trade to ground this belief in love of country. American protectionists have always wrapped themselves in the Stars and Stripes. To support tariffs and subsidies, they say, means you’re a patriot. To favor free trade, the argument goes, implies that you care more about Japan than West Virginian coal miners. President John Quincy Adam’s Secretary of State, Henry Clay was an arch-protectionist. He portrayed free trade as a way for the British to re-colonize the United States!

But American protectionists haven’t played the patriotism card for petty reasons. They know that Americans don’t view love of country as crude and outdated. Americans are still patriotic compared to, say, most West Europeans. Over half of Americans own a flag.

That’s why free traders need to explain that free trade is the true patriotic choice.

Protectionism is all about Special Interests

It’s ironic that so many people link protectionism with patriotism. After all, tariffs and subsidies aren’t designed to help America as a whole. Instead they favor key industries — even certain firms.

Take a look at what’s called the Harmonized Tariff Schedule of the United States. This consists of 22 Sections, 99 Chapters, and several annexes. Talk about “byzantine.” Several different tariffs may apply to the same product in different forms. Even a product as simple as mineral water gets snared in its net. There’s no logic to this. It likely reflects the fact that producers of one type of mineral water had better lobbyists than another.

Protectionism bolsters certain groups at Americans’ expense.

How does this help America? It doesn’t. It just means that consumers pay more for some types of mineral water than others — for no good reason.

The steel industry also shows how the protectionist racket helps the few rather than the many. For 40 years, such policies have sheltered American steel producers from foreign rivals. To what effect? They have pushed up steel prices in the US.

And who pays for these inflated prices? American users of steel. The building industry and car manufacturers end up paying the bill. They in turn pass their extra costs onto their American customers.

That’s why slogans such as “Buy American!” may just mean, “Buy products and services at a higher cost because American companies want you to pay for their protection from competition!”

Such a policy looks more like a racket designed to bolster certain groups at everyone else’s expense. Is that what love of country means?

Free Trade Benefits All Americans

The protectionist racket never seems to help American consumers — all 325,816,150 of them as of March 2017.

Even die-hard protectionists concede that free trade reduces prices. As Adam Smith observed long ago, open markets boost competition and help nations discover what they do well compared to everyone else. This lowers the prices of goods and services for every American, regardless of race, sex, religion, or economic status.

Consider, for instance, the millions of clothes products in American stores thatsay, “Made in China.” Why are they made there? It’s more cost-effective for China to make many types of clothing than it would be for Americans to do so. That means lower-priced clothes for all Americans. This also allows American firms to focus on what they do better than anyone else. Today this includes drugs, petroleum products, medical technology and airplanes, to name just a few.

How is it patriotic to favor groups with political connections at the expense of weaker Americans?

But there’s another aspect of free trade that helps America overall. Free trade boosts competition. Competition helps Americans find their own weaknesses and strengths. It inspires us to innovate and create. It keeps U.S. firms on their toes. And it encourages them to focus on what customers need and want. That’s good for all Americans.

Protectionism, however, gives American businesses an incentive to do the opposite: to grow sluggish and spend money on lobbyists. Rather than focus on customers, they focus on politics. Politicians always notice noisy interest groups, especially if they get something in return.

And who are the biggest losers from these deals? Again, it’s the 325 million American consumers who, unlike businesses, are spread out around the country and don’t have lobbyists.

American patriots should be concerned for the well-being of all Americans. How is it patriotic to favor groups with political connections at the expense of weaker Americans? This means more privileges for the few, and less liberty and justice for all.

And that, to say the least, is hardly American.

 

Samuel Gregg is Research Director at the Acton Institute and author of For God and Profit: How Banking and Finance Can Serve the Common Good (2016).

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  • Paul

    Samuel, if tariffs are so unpatriotic then you consider the Constitution signatories unpatriotic.

  • Irving H Bennett N

    I am a Panamanian born and raised in Panama of American parents. As such I swim in both waters. I have consistently fought for free trade here in Panama but argue for free trade the world over. Without that, there is no free trade.
    We have discovered that if we paid all producers of protected good to go home and scratch their bellies and stop producing that which they sell, the cost of living for the whole country drops dramatically.
    Tariffs and duties are a way of stealing from the people in order to make a few fat cats fatter and lazier. Is that patriotic?

  • Bill Reese

    Free trade hurts national security and the defense industry. Because of not following “Buy American” policies, American defense companies were allowed to source foreign parts, creating nightmares in verifying finished products whether the parts were counterfeit or just of poor quality. Costing billions of taxpayer dollars to test and verify, the US national defense and national security industries are continuing to suffer due to allowance of “free trade”.

    • Charles Burge

      Sorry but I think that’s a really specious argument. If defense contractors are not able to properly vet the products they buy then I think we have far more serious problems on our hands. Limiting their options to American-made products is certainly not the answer here.

      • Bill Reese

        Not only is it not specious, but it has been incredibly real for the past decade. So now you’ve been informed of the problem. The DoD has hundreds of reports each month of what is deemed “counterfeit parts” issues as a real and present danger to US military systems. Limiting the options to US-only parts has been the ONLY successful strategy. Been reported openly in the media for at least the past 7-8 years. But that approach flies in the face of current US acquisition policy that started with the Clinton State Department under the Obama administration. Opening US markets to foreign companies was a real bargaining chip for State. The real question is “when will the current testing practices be allowed to devolve enough so that military systems fail in critical situations?”

        • Charles Burge

          OK I’ll take your evidence at face value. This still seems to be a problem that is limited to the DoD. If that is the case, shouldn’t the solution be tailored to fit the problem at hand? In other words, mandate that DoD purchases be sourced with American-made parts, but let other companies source parts however they see fit.

          • Bill Reese

            That’s a reasonable approach.

  • #EpluribusAwesome

    When we actually have free trade, then this article will be pertinent. It’s not free trade if only our side removes trade barriers.

  • En Passant

    My business went into decline when our biggest customer outsourced work to India for a rate that would have starved our workers if I had been allowed to pay that fraction. The customer corporation made more profits (for a measurable degradation in quality of service), but they did not care. As for the 15 people laid off? Well just collateral damage for a cheaper global mousetrap. Some found other low-tech jobs, some lost their house and family, one became a successful home repair man.

    All for the greater good of a ‘level playing field with the world, of course.

    As for the Defense argument: there are some things such as ‘strategic industries’ which, if you outsource them will leave your country vulnerable just when you need them. When the UK joined the Gulf War-1 they naturally wanted to take some ammunition with them, thinking it might be useful. Unfortunately, Royal Ordnance is now owned by the Germans and their NATO stocks are in Belgium, neither of which cooperated. The ammunition was provided by the USA and had ‘Made in the USA’ stamped on it.

    This also goes for sourcing your spare parts for weapons from foreign countries. Wars are ‘come-as-you-are’ affairs as the Israelis found out when Obama forced them to take a less than optimal deal in Gaza when ammunition began to run low. In Viet Nam, the Australians had the anti-tank, bunker-busting Swedish made Carl Gustav. Although they had ammunition for it, the Swedes invoked their right to prevent its being used in Viet Nam (and it was not much use as a club). One of my soldiers lost both legs to MG fire while storming a bunker that could have been destroyed from a safe distance. Just collateral damage again.

    There are three reasons to allow global products into your market:
    1. The product is a Teddy Bear that has no effect on the national well-being
    2. It is something we do not have and it is not worth the effort to make (some transient software fits this category)
    3. Imports are used to stabilise the local market.

    Australia set a fixed number of cars that MUST be made in Oz (65% of the estimated annual sales), then allocated import quantities to all other countries for the remaining 35% based on how much they bid to pay in tariffs. This resulted in GM, Ford, Volkswagen, Toyota, Nissan and Mercedes Trucks all opening assembly plants in Oz. It spawned an explosion in parts makers that exported around the world. The industry employed 300K people directly and indirectly.

    All protection has now been removed – and the last manufacturer will close down next year.

    I asked the Secretary of Treasury (a committed globalist and free-trader) to refute the above. To his credit, he replied. He said: “The arguments are so self-obvious as to not be debatable.” Just goes to show how dumb I am when questioning the generously superannuated elites and political royalty.

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