Free trade

Tariffs are making headlines, and free trade is a hot topic in global discussions. But when people refer to "free trade," do they mean a complete absence of government policies that restrict imports and exports? That’s the only definition of trade that is truly free of protectionism.

Government policies affecting trade include not only tariffs and taxes but also a range of other measures known as non-tariff barriers (NTBs). Examples include:

1. Quotas: Limits on the quantity or value of a specific good that can be imported.
2. Import Licensing: Requirements to obtain special permission or licenses before importing.
3. Technical Barriers: Standards or regulations (such as health and safety or environmental requirements) that can be difficult for foreign producers to meet.
4. Sanitary and Phytosanitary (SPS) Measures: Health and safety measures, especially concerning food and agricultural products.
5. Rules of Origin: Policies that determine where a product was made, which can affect its eligibility for certain trade agreements.
6. Customs Procedures: Complex or opaque customs clearance procedures, document requirements, or valuation practices that slow down or raise the cost of trade.

In many cases, NTBs are more burdensome than tariffs. So, two countries can have a reciprocal no-tariff policy and still have little trade in goods and services due to NTBs.

Tariffs and NTBs are always and everywhere supported by the producers that receive protection from competition. This was the topic of a satirical essay written by Frédéric Bastiat in 1845:

The Candlemakers' Petition

When supporting tariffs and NTBs to “level the playing field” or defend against “unfair competition,” keep in mind the absurdity of Bastiat’s petition.

If the goal is to attract businesses to establish operations in the United States, consider this approach: repeal the corporate income tax. This would trigger a surge of U.S. companies returning and a wave of foreign companies relocating here. Once that momentum slows, repealing the National Labor Relations Act, along with other federal labor laws and regulations, would spark a second wave of business investment and migration into the country. The United States would experience the “giant sucking sound” in reverse, as per Ross Perot.