US Trade Protectionism Has Imposed Immense Economic Costs on Consumers and the Economy
The recent rise in United States economic nationalism is based on false premises—that past restrictions on foreign competition were successful in decreased imports, increased jobs, industrial revival, open foreign markets, and economic prosperity, according to a recent report from the Cato Institute. “Politicians and pundits use such assertions to justify new nationalist economic proposals,” the report noted, “but they ignore” a slew of academic analyses and real-time reporting that show that American trade protectionism has imposed immense economic costs on American consumers and the broader economy, and also has failed to achieve its primary policy aims. That’s been true even in the periods of protectionism cited as successes, and the trend has also “fostered political dysfunction along the way.”
This Cato Institute report surveys academic literature from three periods of American history: from the founding to the United States’ entry into the General Agreement on Tariffs and Trade (GATT) in 1947; from the GATT’s early years to the creation of its successor, the World Trade Organization (WTO), in 1995; and the current WTO era.
“These surveys show,” the report concluded, “that, contrary to the fashionable rhetoric, American protectionism has repeatedly failed as an economic strategy.”
While it’s true that international trade has foisted disruptions to the US economy, and a discussion of the causes, effects, and solutions would be worthwhile. But that dialog has also “spawned troubling suggestions,” the paper said, “that the US government should be more willing to experiment again with protectionism to help American workers and the economy.”
The Cato report helps counter those ideas, with numerous examples from history of the failure of protectionism as a US policy. “Unless our policymakers quickly relearn this history,” the paper noted, “we may be doomed to repeat it.”
THE “HOMEBODY ECONOMY” AND TRADE