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.