Quartz talks about the benefits of free trade

Here is what Quartz says would happen if the world split into two separate trading blocs.

2.2%: Expected decline in global trade growth in 2022, according to the World Trade Organization

5%: How much global GDP would drop if countries split into two economic trading blocs

1%: Fall in US GDP if this split happened

7%: Decline in GDP for developing nations under the arrangement

43: Countries that Apple sources materials from to build the iPhone

25-30%: Global supply of palladium, a material used in iPhones, that Russia produces

This lesson should be the main one taught by economics

"The main lesson of economics is the mutual gains from trade and the peaceful social cooperation under the division of labor that a modern commercial society engenders" Peter J. Boettke, “Liberalism, Socialism, and Our Future,” The Struggle for a Better World (2021).

So says Don Boudreaux.

Of Trade War and Prices

"Donald Trump’s trade policy picked winners and losers among U.S. businesses and manufacturers."

"About $111 million in tariffs has been paid to the U.S. Treasury over the last four years. But $1.3 billion, according to Harbor, has been pocketed by U.S. aluminum mills and U.S. and Canadian smelters.

"That’s because producers can charge tariff prices even for scrap, domestically produced aluminum, and Canadian aluminum that is no longer subject to tariffs."

"Thus Harbor calculates that beverage manufacturers paid 92% of the $1.4 billion in tariff costs on non-tariffed aluminum."

(WSL, April 2022)

“Free” Sugar Protectionism Is Not As Sweet As It Sounds

"sugar that now costs 19 cents a pound outside America costs us 37 cents a pound" (Galles, AIER, Dec. 2021). 

Another cost of protecting the sugar lobby is are the resources the lobby uses to maintain support in Congress (Cafe Hayek, Dec. 2021).

A Splinter In US-Canada Relations

NPR/Planet Money explains how tariffs on lumber increase the price of houses (Dec. 2021). American lumber industry gains but home construction industry and new-home buyers lose.

How Trump’s Steel Tariffs Failed

The EB of the WSJ reports that the tariff increased prices and profits for steel but had little impact on output and employment. (WSJ,May 2021)

When are people free to choose their economic course?

Don Boudreaux says free trade is civilized because it maximizes the ability of people to choose their economic course while protectionism is barbarous because it uses coercion either to impose conditions on or to restrict altogether choices. His letter is a response to a student who thinks that protectionism lets people choose their economic course.

When Boudreaux speaks of people, he means individuals. To him, "letting the people choose" means letting each individual choose freely without interference from other people. He states that, to the student, "letting the people choose" means letting today's majority of voters impose restrictions on how they and the minority conduct their economic affairs." 

One gain from trade is less hunger

Free trade can prevent hunger caused by climate change (Science Daily, July 2020).

How firms avoid paying tariffs

Firms are using a variety of tricks to avoid paying tariffs Trump imposed on China (WSJ, Feb. 2020). Here are some questions.

1. What determines whether the US firm moves operations to the US, continues to import from China and pay the tariff, or use a trick to sidestep the tariff?
2. Is sidestepping the tariff consistent with the goal of moving operations to the US?
3. Are the tariffs increasing the general standard of living in the US?

George H. W. Bush would say, "Tariffs, bad."

Aaron Flaaen and Justin Pierce, two economists for the Fed, find that tariffs decrease employment and raise prices (Flaaen, Aaron, and Justin Pierce (2019). “Disentangling the Effects of the 2018-2019 Tariffs on a Globally Connected U.S. Manufacturing Sector,” Finance and Economics Discussion Series 2019-086. Washington: Board of Governors of the Federal Reserve System, https://doi.org/10.17016/FEDS.2019.086).

Who loses when China exports more to the US?

This paper examines the impact on prices in the US when China sells more here. Money quotes:

1. "This paper fi nds that U.S. consumer prices fell substantially due to increased trade with China."
2. "The estimates imply that trade with China increased U.S. consumer surplus by about $400,000 per displaced job, and that product categories catering to low-income consumers experienced larger price declines."

What is the difference between protectionism and raising barriers to entry?

Don't import pig semen into Australia.

"Federal agriculture minister Bridget McKenzie said breaches of biosecurity laws would not be tolerated.

"“'his case shows a disturbing disregard for the laws that protect the livelihoods of Australia’s 2,700 pork producers, and the quality of the pork that millions of Australians enjoy each year,' McKenzie said.

"“GD Pork imported the semen illegally in an attempt to get an unfair advantage over its competitors, through new genetics.'

"Western Australian Farmers Federation spokeswoman Jessica Wallace said the offences was 'a selfish act' that could cripple an entire industry.