Dear President Trump: “America First” Should Mean Free and Open Trade

November 14, 2017

by Erik Halvorson


Last Friday, President Donald Trump took the podium at the Asia-Pacific Economic Cooperation summit in Vietnam to deliver a forceful speech in which he doubled down on his nationalist economic rhetoric. In his remarks, Trump rebuked Asian countries and their leaders for what he called “unfair trade practices” saying, “We are not going to let the United States be taken advantage of anymore.” Trump further asserted that the United States was continually subject to what he referred to as “chronic trade abuses” that were costing American jobs. While this rhetoric plays well with much of the President’s political base and is consistent with his past policy positions, it does not concur with his other supposed “America First” policies.

Unfortunately, like many others, President Trump continues to fall victim to some of the oldest and most destructive of economic fallacies. First, Trump’s claim that unfair trade is harming Americans — or that unfair trade could exist in the first place — is logically impossible. Trade is necessarily consensual. Two parties only enter into an agreement if they believe that they are being made better off with the transaction, and unless the President is insinuating that China and other Pacific powers are conscripting Americans to buy their products, trade cannot be unfair. Furthermore, trade is mutually beneficial. As previously stated, humans only buy things which they value more than the money they pay to buy them; otherwise they would keep the money as they value it more. By this logic it becomes clear that Americans are greatly helped by every product they buy from a foreign producer. This is a truth that has been accepted since Adam Smith published his magnum opus Wealth of Nations in 1776.

As to the argument that low-cost manufacturing in countries like China is harming American workers — this is simply false. Americans actually benefit greatly from low-cost manufacturing, as it creates an increase in their real income by making it possible to consume more for the same price. Imagine if you were only allowed to buy things manufactured in the USA! Moreover, this allows Americans to utilize our comparative advantage in the creation of products that we are much better at making, namely intellectual property and technological innovation.

Furthermore, the unfortunate truth is that the vast majority of jobs that are being lost in the US manufacturing sector are being lost to automation rather than low-cost foreign workers. While this sobering truth comes as no comfort to those negatively affected by this development, it does illuminate the fact that any attempt to save these jobs through protectionist policies will fail and lead to burdens on other Americans — as well as hampering creative innovation. Instead, we must make it a priority to help those affected adjust to a changing economic climate by finding solutions to help displaced workers continue to support themselves and their families. This is no easy task; predicting the changes that will arise from the turbulent power of a free economy is nearly impossible so anticipating those that will be affected in the future remains murky at best. Possible courses of action may include government scholarships for reeducation along with temporary welfare to sustain affected families. While these are by no means perfect solutions, they are much more fruitful policies than the erection of trade barriers.

It is also important to critique another fallacious underlying assumption to this thinking. Undergirding the President’s and other protectionists’ positions is the idea that production equals wealth. But while it is true that production is necessary for consumption, it is wrong to assert that a country must produce its own consumption goods (again, imagine if you could only buy things made in the United States). Wealth is simply the availability of valuable things, and as it turns out, trade makes much more available than production ever could due to the concept of comparative advantage.

Trade barriers, on the other hand, increase costs and waste valuable resources through the creation of American-made products which we have no business creating. These high, dispersed costs are often overlooked in favor of the lower but concentrated benefits of temporarily “saved jobs” in specific industries. If President Trump is really concerned with promoting “America First,” he must unshackle the powerful force of the free market and allow it to make us and our fellow humans wealthier — because that freedom, and it alone, was what made our economy great in the first place.


Erik Halvorson is a regular contributor to TheNationalPulse.com and a student at Hillsdale College.

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