Among economists, there is near consensus that the case for free trade made by Adam Smith in The Wealth of Nations is sound and has withstood 240 years of efforts to refute it. Free trade, by expanding the size of the market to enable greater specialization and economies of scale, generates more wealth than any system that restricts cross-border exchange. But one must ask whether consensus in the ivory tower even matters when, in practice, free trade remains stubbornly elusive, and the process of U.S. trade policy formulation is distinctly anti-intellectual.

If the free trade consensus were truly meaningful, trade negotiations would be unnecessary. If free trade were the rule, trade policy would have a purely domestic orientation and U.S. barriers would be removed without need for negotiation because they would be recognized for what they are: taxes on consumers and businesses that impede the global division of labor and the creation of wealth. Apparently, the intellectual consensus for free trade coexists with an absence of free trade and a persistence of protectionism in practice.

That the case for free trade is often rejected by the general public speaks to the endurance of several prominent, oft-repeated myths that inform popular opinions about trade. Among those myths are that: (1) Trade is zero-sum game conducted between national entities; (2) The U.S. trade deficit means the United States is losing at trade; (3) Trade destroyed the U.S. manufacturing sector; (4) Trade only benefits big corporations and wealthy people, and; (5) Outsourcing hurts the U.S. economy.

On this page you will find Cato analyses refuting these and other common trade myths, which distort reality and enable the continuation and implementation of bad policy.

More on Trade Myths

Commentary

President Trump’s Confused Approach to Trade Is One Giant Contradiction

By Ryan Bourne. MarketWatch. June 12, 2018.

Trump’s Trade Adviser Fails the First Test of a Good Economist

By Ryan Bourne. City A.M.. June 5, 2018.

An Ego-Pleasing Way for Trump to Push Trade Talks

By Simon Lester and Inu Manak. Reuters. April 2, 2018.

Cato Studies

Articles

Yes, McKinnon Is Right, Again

Steve H. Hanke. The International Economy. Spring 2013.

The Debt Threat: A Risk to U.S.-China Relations?

James A. Dorn. Brown Journal of World Affairs. Vol. 14. No. 2. 2008.

Outsourcing Benefits Michigan Economy and Taxpayers

Daniel Griswold. Mackinac Center for Public Policy: Policy Brief. September 16, 2004.

Public Filings

Perspectives on the Export-Import Bank of the United States

By Daniel J. Ikenson. Testimony. June 2, 2015.

Trade Promotion Agencies and U.S. Foreign Policy

By Daniel J. Ikenson. Testimony. May 19, 2015.

Manufacturing in the USA: How U.S. Trade Policy Offshores Jobs

By Daniel J. Ikenson. Testimony. September 21, 2011.

Cato Reviews & Journals

Brain-Focused Economics: More Than Just Comparative Advantage

Richard B. McKenzie. Regulation. Summer 2018.

Putting 97 Million Households through the Wringer

Pierre Lemieux. Regulation. Spring 2018.

Trade on Trial, Again

Daniel J. Ikenson. Policy Report. May/June 2016.

Events

#CatoConnects: NAFTA and the Trump Tariffs

Featuring Simon Lester, Inu Manak, and Caleb O. Brown. March 14, 2018. Cato Connects.

The TPP and Pharmaceutical Protections: Too Strong, Too Weak, or Just Right?

Featuring K. William Watson. June 16, 2016. Policy Forum.

Everything You Know about International Trade Is Wrong: A Presentation and Refutation of Ten Pervasive Trade Myths

Featuring Daniel J. Ikenson. April 29, 2014. Special Event.