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


Trade Deficit: Ask the Wrong Questions, Get the Wrong Answers

By Daniel R. Pearson. Huffington Post. April 11, 2017.

A Challenging Road Ahead for Our New US Trade Representative

By Daniel R. Pearson. The Hill (Online). March 14, 2017.

US Trade Laws and the Sovereignty Canard

By Daniel J. Ikenson. March 9, 2017.

Cato Studies

As Promised, Free Trade Agreements Deliver More Trade: Manufacturing Exports Receive an Extra Boost

By Daniel Griswold. Free Trade Bulletin No. 45. June 7, 2011.

The Trade-Balance Creed: Debunking the Belief that Imports and Trade Deficits Are a “Drag on Growth”

By Daniel Griswold. Trade Policy Analysis No. 45. April 11, 2011.

Beyond Exports: A Better Case for Free Trade

By Daniel J. Ikenson and Scott Lincicome. Free Trade Bulletin No. 43. January 31, 2011.


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

Trade on Trial, Again

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

Are Imports a Drag on the Economy?

Pierre Lemieux. Regulation. Fall 2015.

U.S-Japanese Trade: Myths and Realities

Steve H. Hanke. Cato Journal. Winter 1984.