Who is Harmed by Free Trade?

When it comes to debating public policy, we often hear or even ourselves want the government to “do something”. This reflex tends to come from the right place. We see individuals, businesses, and other groups struggling and we think it’s the government’s job to fix what’s ailing them. In the case of tariffs, proponents point to places in the United States that used to be thriving but are now decimated after various manufacturing jobs left town. In this opinion piece by John Michaelson in the WSJ he states, “The flood of imports has cost millions of American jobs and devastated the industrial heartland.” The belief seems to be that free trade has harmed many people, and the only way to remedy the situation is to hamper it by imposing a penalty such as tariffs.

But who or what is causing this supposed harm? I believe everyone involved in the legislative process needs to both be more careful and be more intentional with the words they use to justify their policies. According to Reuters almost half of all aluminum used in the United States is imported, with most of that coming from Canada (Where does the US get its steel and aluminum from? | Reuters). The Ball Corporation in the U.S is one of the largest manufacturers of aluminum cans, including for Coca-Cola. If they used aluminum from the United States, but then switched to imported Canadian aluminum, did they “harm” U.S aluminum producers?

When there is a free exchange of money for goods and services, I would argue there is no harm being done at all. When you decide to get coffee at Starbucks instead of Dunkin Donuts, you did not inflict damage upon Dunkin Donuts. Both companies offered you coffee at distinct qualities with distinct prices and you made your choice based on that information while voluntarily giving your money to Starbucks. Dunkin Donuts certainly would have preferred if you patroned their store instead of Starbucks, but nothing that occurred was unjust.

Now apply this on a global scale. Sometimes we want to buy wine from Italy or avocados from Mexico. Many manufacturers in the U.S need to import lithium-ion batteries from China. Just because a certain product is entering the U.S market from a different country does not mean we should automatically treat it differently. I will have a separate blog post that discusses further when harm actually occurs in our economy. Hint, it rarely if ever comes from the free market.