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Why Economists Love Free Trade But Others See Problems
Part 1 of a Discussion of Tatum’s and Ma’s “Biblical Requisites and Implications of Economic Globalization”
The economic argument for free trade, which is low to zero trade barriers, to increase globalization is pretty clear cut to economists.
Globalization is “traditionally quantified as the increasing amount of cross-border trade in goods and services, and the increasing volume of international financial flows and labor across borders.” (p. 88)
Trade barriers interfere with the flow of goods and investments and thus tend to lead to lower economic growth. There is a known exception. When the country enacting the tariff is a large part of the market, tariffs may be passed on to the other countries. Some evidence supports that regarding President Trump’s tariffs in his first term.
However, President Trump’s argument for tariffs is largely not on economic grounds. He is primarily using them as a negotiating tactic to make trade fair, which he defines as equal tariffs on both sides.
