Whether it’s China and industrial policy, supply chain “resiliency” proposals, “Buy American” mandates, or basically anything else trade-related coming out of Washington these days, it’s increasingly clear that the longstanding bipartisan consensus in favor of free trade in the United States has unraveled. (Don’t say we didn’t warn you.) As we explain in a new Cato paper out today, however, the United States’ inward turn is misguided: the economic, geopolitical, and moral case for free trade remains as strong today as when Adam Smith penned The Wealth of Nations almost 250 years ago. 

On the Economics:

• Trade’s consumer benefits are far more significant than a few cents on the proverbial cheap t‑shirt. Studies find, for example, that Americans save billions of dollars each year due to U.S. free trade agreements, and that trade with China alone saves the average American family about a $1000 per year for the rest of their lives – or about $410,000 in annual “consumer surplus” for every U.S. job potentially displaced by Chinese imports. These consumer benefits are particularly tilted toward poor and the middle-class Americans, who spend more of their paychecks on tradable goods sold at “big box” retailers.
• Trade also produces benefits for companies and workers, including in manufacturing. Exporters gain from selling into newly-opened markets, while importers benefit from moving or selling foreign-made items in the United States (e.g., FedEx or Gap) or from using imported inputs to produce other goods and services.

• These transactions ultimately benefit American workers: New research finds that while only 6 percent of U.S. firms in manufacturing and services are goods traders, they account for half of economy-wide employment and supported 60 percent of all new net jobs created after 2008.
• Finally, free trade is a cornerstone of the “creative destruction” that breeds innovation and improved living standards in America. This process is largely invisible but spurs American companies to improve their products and the U.S. economy to harness comparative advantages in advanced manufacturing and skilled services. The outcome: Not just “cheaper stuff” but better and once-unimaginable goods, better jobs, better companies, and better lives.

On the Geopolitics

• Trade has long been a cornerstone of global peace and stability and national security. The multilateral trading system arose after World War II partly out of a desire to avoid another destructive global conflict. For all its fits and starts, the General Agreement on Tariffs and Trade and its successor, the World Trade Organization have met this aim reasonably well by providing an avenue for countries to resolve commercial disputes without resorting to armed conflict.
• Studies also find that greater trade and economic interdependence promotes peace through a variety of channels. And while economic integration didn’t stop Russia from invading Ukraine, the international backlash has inflicted serious pain upon the Russian economy and sent a strong signal to other countries about the cost of armed conflict.
• As trade promotes economic growth and better living standards in developing countries, it can temper the appeal of joining transnational criminal organizations or terrorist groups.

On the Moral Case for Trade

• Adam Smith wrote that man is “an animal that bargains,” and on this basis, we have built entire communities, cultures, and societies around the principle of voluntary trade. When humans can freely pursue their self-interest through trade, we do so as equals, and the “invisible hand” yields economic and social outcomes that benefit society at large. Protectionism, by contrast, immorally elevates the welfare of a handful of politically important entities and individuals (e.g. steel workers) at the direct expense of everyone else (e.g., steel consumers).
• The morality of trade doesn’t stop at the water’s edge: Trade has contributed significantly to lifting billions of people, especially women, out of abject poverty around the world. Trade also can help developing countries better afford environmental quality and increase access to and consumption of “green” goods and technologies.

On the Failed Protectionist Alternative

• For all the problems that trade is accused of creating, the protectionist alternative has repeatedly proven to impose far higher costs, generate far fewer benefits, and foster far more political dysfunction. A vast repository of economic literature shows that protectionist policies—tariffs, quotas, buy-local mandates, etc.—harm the U.S. economy. More recently, studies show that American consumers (companies and individuals) have borne most of the burden of the Trump administration’s tariffs on home appliances, steel and aluminum, and Chinese-origin goods.
• Protectionism also harms workers by reducing their purchasing power, increasing their companies’ production costs, or exposing their exports to foreign retaliation. Yet protectionism rarely boosts employment in protected industries.
• Indeed, protectionism routinely fails to achieve its economic and geopolitical objectives. Firms in protected industries rarely emerge stronger—instead of innovating, they use their windfall profits to boost executive pay and lobby for greater protection. Meanwhile, tariffs and other trade restrictions rarely compel foreign countries to accede to U.S. economic or foreign policy demands (and in fact, often lead to costly retaliation), and protectionism rarely boosts national security.

On the “China Threat”

• Concerns about the size of China’s economy, state capitalist model, role in the Asia-Pacific region, authoritarian governance, and increasingly aggressive foreign policy are legitimate. But none of these issues justifies an abandonment of free trade or international engagement more generally.
• First, a comprehensive accounting of the last two decades of U.S.-China trade punctures the conventional wisdom. Fewer U.S. jobs were lost due Chinese import competition, while there were also significant economic benefits for the United States. The U.S. government also didn’t “go soft” on China when it joined the World Trade Organization out of some naïve hope that economic liberalization would surely lead to democratization.
• Second, the last three years of U.S.-China policy have conclusively demonstrated that aggressive unilateralism toward China is a losing approach. Tariffs harmed the U.S. economy, including in manufacturing, without changing Chinese policy or repatriating American companies’ global supply chains (see figure 5 below). Aggressive U.S. unilateralism also led China to double-down on nationalism and industrial policy, while maintaining — if not expanding — its problematic human rights abuses and foreign adventurism.

Overall, free trade, while surely not painless, still provides far more – and far more widespread – benefits for the United States (and the rest of the world) than any realistic protectionist alternative. While today’s economic and geopolitical challenges are very real, the best approach remains an open American economy and active multilateral engagement.

You can read the whole paper here.

As reported by Politico earlier this week, the AFL-CIO’s Transportation Trade Department has authored a new statement on U.S. maritime policy that features predictable enthusiasm for protectionist policies such as the Jones Act and cargo preference laws. More interesting, however, is the statement’s inclusion of language calling for a fleet of feeder vessels to transport cargo through the country’s coastal waters:

Creating a fleet of U.S.-built, U.S.-flag and crewed feeder vessels to carry a portion of America’s trade along our coasts to be offloaded in underutilized ports for transportation by truck and rail to their ultimate inland destination will not only strengthen the maritime industry and create jobs aboard ship and in our ports but will help mitigate against future shipping supply chain disruptions.

This passage is significant for at least two reasons. First, it acknowledges that the United States currently lacks such vessels connecting smaller ports to larger ports as part of a hub and spoke system. Second, it states that such a transportation option would help relieve supply chain disruptions by alleviating demands on overburdened truck and rail networks.

Thus, U.S. policies that stand in the way of developing a network of coastal shipping—also known as short sea shipping or marine highways—contribute to the supply chain crisis.

As I’ve written before, one of those policies is the Jones Act. Simply put, requiring the use of vessels that are far most costly to build and operate than foreign ships is a significant disincentive to utilizing this method of transporting goods. The capital costs alone of acquiring such vessels—which must be constructed by U.S. shipyards much less efficient than their foreign counterparts—were perceived by ocean carriers as the single largest obstacle to the implementation of short sea shipping in the United States according to a 2006 study.

As my colleague Scott Lincicome pointed out last September, this lack of coastal shipping has “worsened the current shipping situation by (1) putting additional pressure on inland transit (i.e., trucks and trains are used instead of ships that could travel between U.S. ports); and (2) causing companies to avoid the Jones Act by “port hopping” up and down U.S. coasts using larger, foreign‐​flagged ships that take longer to offload and are prohibited from picking up additional cargo while they’re in port.”

Fortunately, the AFL-CIO may be catching on. Noting the lackluster state of U.S. shipbuilding, the head of the organization’s Metal Trades Department stated in a December interview that foreign-built ships may have to be purchased to help jumpstart marine highways. For that to happen, however, Congress would have to pass legislation waiving the Jones Act’s U.S.-built requirement.

This legislative change wouldn’t solve all of the Jones Act’s problems but would mark an excellent first step in reducing the law’s burdens. Allowing an influx of new, less expensive ships would generate jobs for U.S. mariners, business for smaller U.S. ports, and even potential repair and maintenance work for U.S. shipyards while reducing American highway and rail congestion and transportation costs.

Such change would be good for the environment too: reduced traffic means fewer emissions while ships are a more carbon-friendly means of transporting goods than trucks or rail. Once realized, such benefits could spark an appetite for further liberalization and a paring back of maritime protectionism.

Citing a supposed groundswell of support for rejoining the Trans-Pacific Partnership (TPP), former U.S. Trade Representative Ambassador Robert Lighthizer recently argued that it would be a mistake for the United States to reenter the trade pact. The promising agreement with 11 other Pacific Rim countries was negotiated by the Obama Administration as the economic centerpiece of its “pivot to Asia” but then was unfortunately jettisoned by the Trump Administration as one of its first official acts in January 2017. The remaining TPP members moved forward with the agreement and renamed it the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). Former Ambassador Lighthizer argues that the agreement fails on both economic and geopolitical grounds. His claims do not withstand scrutiny.

First, on the economics: Ambassador Lighthizer recites a well-worn litany of zero-sum mercantilist complaints about the agreement: CPTPP/TPP membership would do nothing to boost the U.S. economy and would not do much to boost exports. That’s simply not true. In 2016, Cato’s analysis of the agreement found that, on net, TPP would have liberalized trade in the United States, thus benefiting American consumers—both firms and families—relying on imported products and services. Trade liberalization may be worrisome to mercantilists like Lighthizer, but its virtues have proven themselves repeatedly over time.

Rigorous economic analyses have confirmed these conclusions in the case of TPP. For example, the Peterson Institute for International Economics found that, if implemented, TPP would have raised real incomes in the United States by $131 billion annually by 2030 and increased U.S. exports by nearly $360 billion over that span, more than 9 percent above the 2014 baseline used by the authors of the study. Most of these gains would come from manufactures and services exports. Even the notoriously timid U.S. International Trade Commission, whose projections Lighthizer trumpeted for the trade agreement he completed, found that by 2032 TPP would have raised real income by $57.3 billion, increase GDP by $42.7 billion, create 128,000 jobs, while exports to new trading partners would grow by over 18 percent. Ambassador Lighthizer should ask himself why so many powerful economies—South Korea, Taiwan, the United Kingdom, and yes, China—are clamoring to join CPTPP if the agreement is so economically meaningless?

Lighthizer also decries various trade deficits the United States runs with certain CPTPP countries, which was the bête noire of the Trump Administration in which he served. Economists almost universally ignore bilateral trade deficits and the overall trade deficit when considering the effects of U.S. trade policies. Nevertheless, it is worth noting that the U.S. trade deficit—and bilateral trade deficits with TPP members Vietnam, Malaysia, Canada, and Mexico—increased between 2016 and 2019, when TPP was not in force here and Ambassador Lighthizer was spearheading an aggressive, multifront trade war with numerous countries, including close allies. (Indeed, it’s all but certain that Lighthizer’s tariffs on Chinese imports caused imports from those TPP countries—and others—to surge.) Nevertheless, the simple reality is that the balance of trade is driven by larger macroeconomic factors and not a magic scorecard for trade policy.

But what are the real economic results of the United States’ decision to withdraw from CPTPP/TPP? American consumers, including domestic firms relying on imported inputs, face higher prices and fewer choices than their peers in CPTPP/TPP countries, while exporters face higher barriers in reaching new consumers than their competitors in the trade bloc. Indeed, a study from the Canada West Foundation found that U.S. withdrawal from TPP likely cost American exporters $3.1 billion per year in lost sales.

Second, there is the geopolitics. Lighthizer claims that the strategic arguments for the agreement—using TPP as an economic counterweight to China’s growing influence in the Pacific region—are “fallacious.” Like his economic complaints, this too misses the mark.

The geopolitical calculus for U.S. membership in CPTPP/TPP is straightforward: Countries tend to gravitate—economically and diplomatically—toward the largest nation in their region. Through the TPP, however, the United States could provide countries in China’s orbit with an alternative market of similar size, as well as a framework for discussion and dispute resolution based on the rule of law rather than economic might. In other words, CPTPP/TPP was to be a useful tool of soft influence in an increasingly important region of the world, which could be leveraged to help counterbalance China’s economic gravity and Beijing’s legitimately troubling commercial and diplomatic practices. It was not, of course, a silver bullet – but it was surely better than the geopolitical status quo (or, you know, actual bullets).

Proponents of CPTPP/TPP argued that in the absence of U.S. leadership, China would fill the void in writing the rules and establishing the norms that govern commerce in the Asia Pacific region in the 21^st century. Sadly those claims were prescient: As my Cato colleague Colin Grabow explained recently, China’s response to TPP was its own Pacific trade deal, dubbed the Regional Comprehensive Economic Partnership (RCEP), which went into effect at the beginning of the year. Though generally lower quality and less comprehensive than TPP, RCEP cut tariffs and provided some regulatory harmonization to further integrate the members’ economies.

CPTPP/TPP withdrawal also signaled a dramatic shift in U.S. international economic leadership and damaged its credibility. It was the first trade agreement that the United States negotiated to completion and then failed to ratify and implement. That decision, coupled with the Trump Administration’s reckless trade wars with longstanding allies, sent a distinct message to the rest of the world that the United States was turning inward and could not be trusted to defend the rules and norms it carefully cultivated over the last 70 years. Few could be happier with this outcome than Xi Jinping.

Finally, it is imperative to note what Ambassador Lighthizer tellingly ignores: the results of his own approach to trade policy, heavy on unilateralism and political favoritism and dismissive of economic engagement. Countless academic studies have shown that the tariffs have imposed a significant toll on American consumers. For example, the New York Federal Reserve estimates that the tariffs increased costs by about $830 per year for the typical American household through direct costs and efficiency losses. Meanwhile, Moody’s found that the trade wars cost about 300,000 jobs. Was this approach really better than the admittedly slow and messy “engagement” alternative? Unlikely.

Instead of fighting allies, waging trade wars, and embracing tariffs—not to mention ceding the Asia-Pacific standard setting to Beijing—the Trump Administration and Ambassador Lighthizer should have worked to renegotiate the parts of the agreement that they viewed as misguided. The result still would have been imperfect, but it’d be lightyears better than what we have today.

Hopefully, the Biden Administration can learn from its predecessor’s many mistakes.

In the midst of high inflation, the federal government continues to build on bad policies for the U.S. housing market. Instead of addressing current rules creating an inflexible environment for building houses, the government imposed new duties on steel nails, a crucial component for home construction. These duties will increase the cost of construction, further contributing to scarce housing and higher home prices.

Last month, the United States International Trade Commission (ITC) predictably determined that the U.S. nail industry has been injured by “dumped” and “subsidized” steel nails from India, Oman, Sri Lanka, Thailand, and Turkey. The decision paves the way for new taxes (duties) on those imports to protect American nail-makers and, in the process, provides several important lessons about the problems with the U.S. “fair trade” (antidumping and countervailing duty) laws that facilitate these measures.

Under U.S. law, a product is considered dumped if a foreign company is selling it, “at less than fair value.” And if a foreign government subsidizes the production of a good sold in the U.S., these subsidies may also result in the product being sold “at less than fair value.” American businesses can therefore petition the U.S. government to correct these “unfair practices” under antidumping and countervailing duty law. Antidumping and countervailing duty investigations are notoriously complicated; for a complete timeline of the investigations, see here. For Cato’s more detailed work on AD/​CVDs see here, here, here, here, here, and here.

The ITC’s recent decision on steel nails came as no surprise because, as Cato scholars have frequently discussed, the U.S. trade remedy system all but ensures that duties will result from domestic industry petitions for trade remedy protection. Yet the decision remains noteworthy for several other reasons, all of which reveal some of the system’s many flaws.

First, the case provides a clear example of how trade remedies duties (like most protectionism) rarely produce a vibrant and competitive domestic industry and instead simply motivate protected companies and workers to seek even more government support. In this case, the new AD/CVD orders join myriad duties already imposed on imported steel nails (some reaching almost 324 percent!). Now, about half of the top 20 U.S. trading partners for steel nails will be subject to additional tariffs.

Second, and relatedly, the case shows how the U.S. government systematically ignores consumer or broader “public interest” impact when imposing trade remedy taxes on imports. Here, new duties will, especially when combined with previous duties, put upward pressure on U.S. prices of a key construction input (nails), right in the middle of an American “housing crisis.” Indeed, a recently published Cato Institute study showed that trade remedies duties on construction materials, including nails, increased domestic prices and likely contributed to rising home prices. Artificially increasing the price of steel nails during a time of high inflation is nonsensical and unfair. Yet, U.S. law prevents the ITC from even considering these effects when determining whether to impose new duties.

Third, the case shows how “injury” to a domestic industry is often blamed on foreign competition but is actually the result of bad U.S. policy. In particular, the U.S. government has spent the last four years working to increase the domestic price of steel (nails’ only major input) via tariffs under Section 232 of the Trade Expansion Act of 1962. As discussed here last year, the tariffs quickly increased U.S. steel prices far above the prices of the same materials abroad, thus undermining steel-consuming manufacturers’ competitiveness versus their foreign counterparts. In this case, the tariffs made American-made nails more expensive—a fact that Mid Continent Nail (the company petitioning for these AD/​CVDs on nail imports) itself confirmed. In particular, the company experienced direct cost increases of 25 percent resulting from the Section 232 tariffs, 19 percent of which it passed on to their customers.

Instead of simply removing the Section 232 tariffs and instantly boosting the competitiveness of companies like Mid Continent, the U.S. government has, at the company’s request, imposed new duties on its foreign competitors, thus, pushing the tariffs’ harms downstream to American consumers, likely to be seen throughout the economy more broadly.

That companies like Mid Continent can successfully lobby for tariff protection after finding themselves injured by similar U.S. trade measures demonstrates not only the perils of “cascading protectionism” (tariffs on inputs leading to tariffs on downstream products), but also the Kafkaesque nature of U.S. trade policy today. One can’t really blame Mid Continent for using the AD/CVD system to protect its bottom line, but we can and should blame the laws that let them get away with it (and, in the process, paper over bad U.S. policies inflicting the real harms to the company).

Root and branch reform of the system is long past due.

The problem with public works projects in Florida, some state politicians believe, is that they’re too cheap. That at least is one conclusion to be drawn from legislation under consideration in Tallahassee. Rather than purchasing iron and steel from whoever offers the best value, bills circulating in the Florida House and Senate would restrict state public works projects to only using those materials produced by U.S. firms.

It’s doubtful that politicians supporting these bills would limit themselves to only shopping at one store, so why should state public works projects only purchase iron and steel from one country?

Since U.S. manufacturers don’t always offer the best prices, such legislation would mean more expensive iron and steel. That’s no small thing for public works projects. The Pensacola Bay Bridge, for example, used two 800,000 pound steel arches that had a special coating applied in Europe for protection from the saltwater environment. Under the proposed bills, however, the foreign “application of coatings” is prohibited, and an already expensive project would have seen its price tag further increase.

Even supporters of the legislation tacitly admit that it will increase costs, with one provision suspending the U.S. iron and steel requirement if a project’s overall project cost would increase by more than 20 percent. But that would still lead to significant cost hikes. A 20 percent increase in the $427 million Pensacola Bay Bridge project, for example, would have meant $85 million in additional spending.

When projects become more expensive, that means either less money for other priorities like public safety and education, increased borrowing, or higher taxes to make up the difference. That’s the opposite of what Florida needs. State legislators should be seeking to maximize value from taxpayer dollars, not looking for new ways to fritter them away.

But perhaps this is all based on a misunderstanding. When pressed about higher costs, one supporter of the bill said that tax dollars should be invested in the American economy rather than sent elsewhere. That’s not how the international economy works.

Dollars spent on foreign products aren’t permanently exiled from the country, but rather return when foreigners use money from their exports to buy U.S. goods and services or invest in the United States. This back-and-forth exchange is what trade is all about. The more than $50 billion in manufactured products exported by Florida in 2018 and over 10 million international visitors to the state in 2019 would not be possible without dollars in foreign pockets. Imports help drive exports.

Restricting iron and steel expenditures to U.S. firms doesn’t mean a healthier economy, it just means getting less bang for Floridians’ collective buck.

So, who benefits here? U.S.-based steel interests are almost certainly enthused about the bill padding their bottom line, but it’s unclear they need the help amidst record profitability. And these kinds of corporate handouts shouldn’t count as help anyway, with such giveaways hardly preparing firms to thrive in a fiercely competitive marketplace. To be the best, U.S. steel and iron producers need to compete against the best—including foreign firms. Frankly, they should be insulted by such legislative set-asides which seem to assume that American firms can’t win contracts fair and square.

If supporters believe that set-asides for the iron and steel industry will bolster the state’s economy, they are sorely mistaken. Like all forms of protectionism, all these will do is raise costs and reduce purchasing power while coddling firms that instead should be forced to compete. Florida politicians should be trying to get maximum value from precious taxpayer dollars and doing more with less, not less with more.

I wrote “Get Ready for the Oil Price Drop” in June 2008 for the New York Post. It proved to be a good and timely call. The price of WTI crude peaked at $133.90 that month before falling to $41 that December.

There are obvious differences between 2022 and 2008 (unpredictable warfare and sanctions), but some economic principals I enumerated in 2008 still apply even if the timing does not.

Here are a few points I raised in 2008 which may still be worth keeping in mind:

“A huge share of crude oil is used to produce and distribute industrial products. That explains why the price of oil is extremely cyclical – that is, it tends to rise during economic booms and fall during contractions.”

“Oil prices have a huge impact on producers’ cost of production – profits and losses – not just on consumers’ cost of living.”

“Nine out of 10 previous postwar recessions began shortly after a big spike in the price of oil. Yet those recessions always slashed oil prices dramatically. People who have been predicting both a nasty US recession and $200 oil prices are contradicting themselves… But note that a US recession isn’t required to bring down the price of oil. All that’s needed is industrial stagnation or decline in many other countries.”

“When the price of anything gets unbearably high, it discourages demand. The resulting drop in sales, in turn, causes inventories to pile up and the price to come down.”

Just as Congress was poised to ban imports of Russian oil, President Biden got the jump on them with an executive order. Despite the delay, it was the right thing to do as a national expression of moral outrage over Russian military atrocities.

The White House repeatedly explained its two-week inaction by suggesting that U.S. gasoline prices depend on how much oil we buy from this one minor source of imports.

In late February Reuters reported, “As the White House developed the sanctions package… [officials] were concerned about the possible impacts of a loss of Russian oil supply at a time of rising U.S. gasoline prices … I want to limit the pain the American people are feeling at the gas pump. This is critical to me,” Biden said.”

Similarly, in a recent conference Press Secretary Jen Psaki said, “We don’t have a strategic interest in reducing the global supply of energy and that would raise prices at the gas pump.” She added, “We are looking at options we could take right now to cut U.S. consumption of Russian energy, but we are very focused on minimizing the impact to families. If you reduce supply in the global marketplace, you are going to raise gas prices.”

The White House needs a lesson in basic energy economics. The global market for oil depends on the amount demanded and supplied, not where it comes from or where it goes. The global market for crude oil does not depend on whether the U.S. imports oil from Russia or Canada, nor does it depend on whether Russia sells that oil to the U.S. or China.

Cutting U.S. consumption of oil from one country is not even a reduction of global demand, much less a reduction of global supply. The U.S. only bought 1.3% of Russia’s crude oil exports in 2020 and the U.K. only 1.5%, according to Statista, while China bought 32.8%. For U.S. to unilaterally ban U.S. oil imports from Russia (even if joined by the U.K.) would not reduce the global supply at all unless Russia could not sell such small amounts to any other country.

Speculators promptly lost money betting on the incoherent Psaki-Biden theory of oil prices. A March 8 headline, from CNBC, was “Crude oil jumps as much as 7% on U.S. ban of Russian imports was quickly followed the next day by “U.S. oil prices take sudden leg downward,” with the April futures price down from $130 to $108.

A U.S. ban on Russian oil would not even lower global oil demand unless the U.S. made no effort to replace that tiny amount of oil by simply importing from another country or by diverting U.S. oil exports to domestic use. If stopping U.S. imports of Russian oil reduced global demand, that would push oil prices down – not up.

The Table shows that the U.S. imported 405,000 barrels per day (BPD) of oil and products last December but only 90,000 of that was crude oil. The annual average was 3% of U.S. crude oil imports, but that was cut by more than half by year end. Since December imports of Russian crude have slowed to a trickle of shipments leftover from past contracts, which must be phased out in 45 days. “Figuring that something like this might be coming, US companies have already started to prepare for the shift to other suppliers, domestic and foreign.”

Switching U.S. purchases from Russia to other suppliers does not change the size of global demand, only its location. Replacing Russian crude with oil from somewhere else would only reduce the global supply if Russia could not sell another 90,000 barrels a day to another country, such as China.

In 2021, more than 70% of what is usually counted as “Russian oil” imports in 2021 consisted of petroleum products “which include unfinished oils, such as naphtha, some types of fuel oil, and feedstock for refiners of heavy crude. Those products are used for further processing and are then used in refined goods exported largely to Mexico and South America.” Such semi-refined products are not directly relevant to the world market and price for crude. And they can easily be replaced with domestic products, albeit with higher shipping costs to the East Coast. The U.S. could easily slash imports of Russian petroleum products by simply trimming much larger $89.4 billion U.S. exports of petroleum products in 2021.

The U.S. is big net exporter of liquified natural gas (LNG) and a small net exporter of coal, so we also don’t need those from Russia. The only reason the U.S. both imports and exports coal and LNG is to save a little on transportation costs when shipping from a foreign source is closer or cheaper than from a domestic port (such as VA for coal, TX for gasoline, and LA for LNG).

Relative shipping costs also help explain why the U.S. both imports and exports petroleum and refined products. As The Wall Street Journal recently explained: “The Jones Act, passed a century ago, has effectively limited the size of vessels that are allowed to transport goods between U.S. ports. That has left oil buyers on the West Coast and East Coast effectively unable to get supplies shipped out of the Gulf Coast.” If the new ban on importing Russian coal, LNG or fuel oil has any discernable regional effect on those domestic prices, it would only be through slightly higher transportation costs to the coasts.

Formally ending the small and shrinking U.S. imports of Russian crude will not be noticeably harmful to the U.S. because that vanishing trickle of Russian crude can easily be replaced with oil from Canada, Mexico, Latin America, or the Middle East – just as we previously switched to importing more Russian oil after imposing sanctions on Iran and Venezuela (who now look like the lesser of three evils).