Trade Myths Die Hard, by Laurence M. Vance

Trade is what people do when they are free to do so. Sometimes they trade with people from other countries. People trade because it makes both parties better off, or they wouldn’t do it. When governments restrict or stop trade, people are worse off. It really is that simple. From Laurence M. Vance at

I received several comments and questions regarding trade after the publication of my recent article, “Stupid Countries Restrict Trade.” Here is a summary of some questions that a few people had:

What should the government of the United States do if other countries impose tariffs on U.S. goods exported to their countries?

What should the government of the United States do if a country subsidizes its exports to the United States?

What should the government of the United States do if it had no tariffs on foreign imports but other countries imposed tariffs on U.S. exports?

Trade myths die hard. Here are three of them I want to refute based on the comments and questions I recently received.

Trade takes place between countries.

To the contrary, trade almost never takes place between countries. Although people often talk about the United States trading with China, India, or Canada, foreign trade really just occurs when entities in one country engage in commerce with entities in some other country. No county offers to exchange 1,000 bushels of apples for another country’s 1,000 bushels of tomatoes. No country buys up 5,000 tubes of toothpaste from domestic manufacturers and offers to sell them to the government of, or a business, organization, or individual in, another country for cash. Trade takes place between individuals, organizations, and businesses in countries, not between countries themselves. An individual, organization, or business in one country may sell a product to the government of another country, but that doesn’t mean that trade is between countries. The rare case of one country trading with another would be like the U.S. government selling an old Navy ship to the government of another country.

To continue reading: Trade Myths Die Hard


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