Barely a month later, Trump unilaterally reimposed tariffs on some aluminum imported from Canada.

Export plague / For the authors and ghost writers of the Hill piece, the only benefit of “free trade” is that it promotes U.S. exports. The USMCA, the authors glowingly wrote, will “increase U.S. annual agricultural exports by $2.2 billion.” This crowing claim comes just a few lines after the statement that “agriculture is what puts food on the table, literally and metaphorically.” They better take their “metaphorically” very literally because exported agricultural products actually take food away from American tables in order to feed foreigners. If agricultural products were not exported, they would flood the American market, push food prices down, and fill national stomachs. But logic is not the protectionist nationalists’ strong point.

Neither is their economics. By definition, exports use national resources to produce goods (say, wheat) and services (such as a university education or foreign tourists’ accommodation) to be consumed by foreigners. If these goods and services were not consumed by foreigners, they would be consumed by domestic consumers, or the resources used to make them would be released to produce other goods and services that domestic consumers want or inputs that domestic producers could use. You would think that a rational nationalist would consider exports a plague.

Now, consider imports, which by definition use foreign resources to produce goods and services for the benefit of domestic consumers or producers. You would think a nationalist would glowingly welcome imports. (With a bit of mischievousness, one can imagine a national protectionist politician exclaiming, “Let’s have our cars manufactured by those Mexican criminals. Mexico will pay!”)

Consumers through the wringer / Why do protectionist nationalists believe the exact contrary? Why do they favor exports and blame imports? One reason is that nationalism is typically an emotional creed that cares little for reasoned analysis. Closely related is the fact that economic freedom, which includes the freedom to import, reduces the power and glory of the national state, which is not agreeable either to the left or the right.

Another reason is that the political dice are loaded in favor of national exporters against national consumers. The interests of producers (workers, executives, and capitalists) win over the quantitively more important but more diluted interests of consumers. Consider the example of the tariffs on foreign washing machines decreed by the Trump administration in January 2018.

These tariffs cost about $1.5 billion in higher prices to the 8–10 million American households who buy a washing machine in an average year. This protectionist measure created 1,800 jobs in America (and, of course, boosted the wealth of investors in the domestic washing machine sector). The consumers’ cost per job created is thus more than $800,000 per year. The producers will lobby politicians for such protection because each producer has much at stake: a job or profits. Households will do little, and will even ignore the issue, because each one is losing less than $100 when buying a washing machine every 10 years. (Data are from “The Production Relocation and Price Effects of US Trade Policy: The Case of Washing Machines,” by Aaron Flaaen, Ali Hortaçsu, and Felix Tintelnot, American Economic Review 110(7): 2103–2127 [2020]. See also “Putting 97 Million Households through the Wringer,” Spring 2018.)

It is a testimony to both the bias of the political process and the brotherhood of the Democratic Party and the Republican Party (especially under Trump) that Whirlpool, a domestic manufacturer of washing machines (and the only one that is domiciled in the United States), had similarly obtained two (less stringent) protectionist actions under Barack Obama, in 2012 and 2016. To quote Obama in another context, he declared in his first address to Congress in 2009: “New plug-in hybrids roll off our assembly lines, but they will run on batteries made in Korea. Well, I do not accept a future where the jobs and industries of tomorrow take root beyond our borders. … It is time for America to lead again.”

A related reason for the incoherence of protectionist nationalism is that job creation in exports or in import substitution (producing goods domestically that were previously imported) are visible and provide great photo-op opportunities to politicians, while changes in consumer welfare are more difficult to identify immediately.

Link between imports and exports / Looking at this from an individualist — as opposed to a nationalist-collectivist — viewpoint helps us understand why Americans benefit from international trade. Why do Americans export? In a free society (without government subsidies), it is because they want to increase their sales and sell at good prices on the world market. And they are able to sell on the world market because they are among the most productive producers in certain industries where America has a comparative advantage.

American export activities are closely related to imports into America, even if neither exporters nor importers are aware of it. The foreign customer of an American exporter will have to obtain dollars to pay for his purchases. These dollars come through the foreign exchange market from some other Americans who have imported something from the same foreign land or who have invested there. Or the dollars could have come from a third country that trades with the other two. A country can only export if it imports an equivalent value from the rest of the word (or invests an equivalent value there). Thus, increasing American exports means, one way or another, today or tomorrow, increasing imports into America.

Of course, saying that “a country” imports or exports is a figure of speech. In a free country, only individuals or their private companies import or export. Under tyranny, the government does it (although the government is also composed of individuals).

Protectionist nationalists seem to also ignore why Americans import from abroad. The answer parallels the answer to the question of why they export. Individual Americans, directly or through middlemen, import because they get a good deal, which means that they get a better price or better quality (each one according to his individual evaluation) than they would get at home. They import from countries that, for the product in question, have a comparative advantage over the United States.

Since Americans freely import and export when it is in their interests to do so, free trade — unhampered by their own government in both exports and imports — must be in the interest of “the United States.” Foreign governments, it is true, can interfere in “our” exports, but our own government interfering with “our” imports just multiplies the damage.

Of course, like domestic competition or technological change (or pandemics, for that matter), international competition often creates disruptions. But the nationalists should understand that “the country” cannot progress and prosper without disruptions. Moreover, if exports are assumed to be good for each individual country, imports must be, too, because total world imports are necessarily equal to total world exports.

A coherent nationalist would understand that the main purpose of exports is to buy imports, as James Mill explained in his Elements of Political Economy (original edition in 1821):

In summary, here is what the three Republican lieutenant governors do not understand: Americans work for foreigners by exporting what they do relatively better than foreigners; and foreigners work for Americans by producing and exporting to America what they do relatively better than Americans. By exchanging their products, both groups get more to consume, just like, say, butchers and plumbers in domestic trade. In terms that a coherent nationalist might better understand, America uses “its” national resources to produce goods and services for foreigners because “it” benefits from the use of foreign resources producing things for “itself.” And do not forget that the American importer is as much an American as the American exporter and equally worthy of the nationalist’s love.

Clearing the incoherence of protectionist nationalism destroys the justification for both export glorification and protectionism.