Why Economists Are Worried About International Trade
Even if Portugal was better than England at producing both wine
and cloth, if Portugal had a larger advantage in wine production, Portugal should export wine and import cloth.
But in light of the growing evidence of the Trump administration’s apparent disdain for free trade, from the recent tariffs, to a report recommending fresh quotas or tariffs on steel
and aluminum, to its earlier rejection of the Trans-Pacific Partnership, it may be worth reviewing the theory, as well as the evidence that convinces economists that the theory is right.
His answer was that trade depends on comparative advantage — how good a nation
is at producing one thing relative to how good it is at producing another.
Similarly, nations should specialize in producing what they do best and freely trade with other nations to satisfy their consumption needs.
When President Trump imposed tariffs on imported solar panels
and washing machines, I was reminded of a line from George Orwell: “We have now sunk to a depth at which the restatement of the obvious is the first duty of intelligent men.”
While Orwell’s comment was focused on military and political issues of the late 1930s, my subject is economics,
and to most people in my field, the benefits of an unfettered system of world trade are obvious.
Similarly, landlocked nations are disadvantaged compared with nations with their own seaports.
