Marko Papic on how Canadians are reacting to Trump's trade war

I want you to pay attention to this giant Canadian flag behind me on the BC legislative building in Victoria, British Columbia, the capitol of the province.  It's indicative of the kind of nationalism that's sprung up, not just in Canada, but in other places as well in the world as a reaction to the realization that the Trump administration is no longer representing this magnanimous American one can rely on.  Rather, most of these countries have to do some painful structural reforms.

What that means for Canada in particular is the upcoming legislative bill called The One Canadian Economy Bill, which, for the first time in Canadian history, is going to bring down trade barriers between provinces and spur more... left-right trade rather than north-south, which Canada has been doing for most of its existence, effectively depending on American demand. 

~ Marko Papic, Twitter/X post, July 25, 2025

 

Murray Rothbard on how foreign aid subsidizes exports

Another crucial feature of post-World War II establishment trade policy in the name of "free trade" is to push heavy subsidies of exports.  A favorite method of subsidy has been the much beloved system of foreign aid, which, under the cover of "reconstructing Europe," "stopping Communism," or "spreading democracy," is a racket by which the American taxpayers are forced to subsidize American export firms and industries as well as foreign governments who go along with this system.  Nafta represents a continuation of this system by enlisting the U.S. government and American taxpayers in this cause.

~ Murray Rothbard, "The Nafta Myth"

(Article appeared in Making Economic Sense, p. 308.)

Murray Rothard on free trade

The major point is that genuine free trade requires no negotiations, treaties, super-power creations, or presidential jetting abroad. All it requires is for the United States to cut tariffs and quotas, as well as taxes and regulations. Period. And yes, unilaterally. No other nations or governments need get into the act.

~ Murray Rothard, "'Free Trade' in Perspective"

(Article appears in Making Economic Sense on p. 304.)

1995

Max Rangeley and Daniel Hannan on the post-WWII trade order

In closing, we know what happened when the world moved away from Cobdenite [free trade] principles.  It happened at the beginning of the 20th century with cataclysmic consequences.  Indeed it was precisely as a reaction to the horrors of the two wars, the Holocaust and the Holodomor that delegations from the free nations met in Bretton Woods in 1944 and agreed to a progressive reduction in trade barriers, a policy which led to the creation of what is now the World Trade Organization and to seven decades of unprecedented democracy as well as unprecedented prosperity.  

That process is now going in reverse.  Trade is falling as a proportion of global GDP and we are seeing a revival of the doom loop between political instability and autarkic tendencies.  "The owl of Minerva," wrote Hegel, "spreads its wings only with the gathering of the dusk."  If ever there was a time to remind ourselves how fortunate we have been in the economic order we have enjoyed, that time is upon us.

~ Max Rangeley and Daniel Hannan, Free Trade in the Twenty-First Century," Preface

2025

Kishore Mahbubani on how China learned from the collapse of the Soviet Union

I think out of necessity they [the Chinese] have to have a strategy.  And they do have one.  So for example, they ask themselves the obvious question: "Why did the United States successfully defeat the Soviet Union?  Why?"  And I must say, the one country that has studied the collapse of the Soviet Union more carefully than any country in the world is China because China knows that the dream of the United States is to make China the second Soviet Union that collapses.

So how does China prevent a collapse?  First point, the Soviet Union didn't collapse because of external pressures; it collapsed because of internal weaknesses.  And so China realizes, "To make sure I survive, I must have a very strong dynamic economy and strong dynamic society."  [...]

So the Chinese know that the first priority is to make sure your economy is strong and your society is strong, which is why they're massively educating their people and growing their economy, so that they don't become a second Soviet Union.  

The second thing that the Chinese learned from the collapse of the Soviet Union was that the United States succeeded because it managed to get a lot of the neighbors of the Soviet Union to join the containment policy everywhere: Western Europe, Japan, South Korea, both ends of the Soviet Union.  So what did the Chinese do?  The Chinese launched a preemptive strike against a containment policy by making sure that its neighbors depended on the Chinese economy.

I'll give you a simple example.  Singapore is part of Southeast Asia and we are part of an organization called ASEAN and ASEAN started as a pro-American organization.  In fact, when ASEAN was created on August 8th, 1967, both the Soviet Union and China denounced the creation of ASEAN as a pro-American organization.  It's true, ASEAN was pro-American, pro-Western.  And what was stunning was that even though ASEAN was pro-American, pro-Western and we had longer dialogues with the United States, European Union, Australia, Japan, everybody, none of our Western friends proposed a free trade agreement to ASEAN.  The first country to propose a free trade agreement to ASEAN was China in 2001.

And the impact of that China-ASEAN agreement was phenomenal.  Because in the year 2000..., ASEAN's trade with the United States was $135 billion and our trade with China was only $40 billion.  So U.S. trade was more than 3 1/2 times what China's trade with ASEAN was.  But as a result of the free trade agreement, by 2022, even though ASEAN's trade with the United States has gone from $135 billion to $450-500 billion, an increase of over three times, China's trade with ASEAN went from $40 billion to $975 billion dollars, almost $1 trillion dollars, the world's largest trading relationship in 2022!  So there's no way ASEAN can join a containment policy against its largest trading partner, right?  It's crazy.

~ Professor Kishore Mahbubani, "Kishore Mahbubani REVEALS China's Strategy to Counter USA," Rise of China, 6:35 mark, March 25, 2025

(The Association of Southeast Asian Nations was established in 1967 by Singapore, Thailand, Malaysia, Indonesia and the Philippines.  It has since been joined by Brunei, Vietnam, Laos, Myanmar and Cambodia.)

Jeffrey Sachs: "the first principle of international economics is mutual gain"

Our economy depends on China, their economy depends on us, not to every dollar or yuan, but for our prosperity, this has been a tremendously beneficial two-way trade. By the way, the first principle of international economics, which I have taught for 44 years, is mutual gain.  Trade is not about one side winning and the other side losing.  That's how generals think.  But economists say, "Trade is about mutual gain.  We get something, you get something.  And the United States has overall been enriched by China's rise. 

~ Jeffrey Sachs, "Harvard Economist Shocking Prediction for US China Relations in 2025," Cyrus Janssen, 10:25 mark, November 24, 2025

Kevin Duffy on who pays for tariffs

All taxes are taxes on production.  Ultimately the consumer pays the tariffs, but that doesn't measure the true costs.  If there were 100% tariffs on Chinese EVs (there are, they were quadrupled under the Biden administration), no Chinese EVs will be sold in the U.S.  This harms American consumers without raising a penny for the government.  

Poverty requires no explanation.  Just go live on a desert island and try to make everything yourself.  Wealth creation requires specialization (getting the highest value for your time) and trading the fruits of your labor with others.  Trade, as long as it's peaceful and voluntary, is win-win.  Both sides benefit, otherwise the exchange wouldn't take place.  The more people we can trade with and the more they produce, the wealthier we become. 

In other words, tariffs are a tax on wealth creation. 

Economists disagree on a lot of things, but the case for free trade is not one of them.

~ Kevin Duffy, Facebook post, February 2, 2025

Kevin Duffy on Trump, trade and tariffs

Outside of Trump’s inner circle, nearly everyone seems to understand the destructive nature of tariffs, even Keynesian economists and Trump voters.  After the election, the stocks of dollar stores immediately sold off on concerns the industry would face higher costs in a trade war with China, no doubt passed on to their lower- and middle-income customers.  Investors, at least for now, are downplaying these risks.

The problem is that the very essence of Trump is that of a pragmatic, businesslike interventionist who thinks trade is “negotiable” and “reciprocal.”  In a sense, he is right: trade is mutually beneficial, but to the parties involved, its terms are negotiated by the parties involved and each gives up something to get something in return.  However, when a third party, in this case the government, interferes, it can only interject its own wants and needs.  It does so through violence, i.e. it gives up nothing and benefits at the expense of those who would otherwise trade with each other.  While the state gains power, both parties to the trade are made poorer. 

Protectionism prevents a nation’s consumers from securing the best products at the lowest prices around the world.  It also denies producers and distributors the cheapest inputs and best deals.  Trade and peace go hand in hand.  A healthy global economy and rising living standards require expanding trade, specialization and the division of labor.  Protectionism moves in the opposite direction, towards self-sufficiency, nationalism and ultimately impoverishment. 

When Trump threatens 100% tariffs on anyone who refuses to trade in U.S. dollars, he is playing with fire.  In response to the Smoot-Hawley tariff of 1930, global trade plummeted 65%, plunging the world into depression and laying the groundwork for nationalism, authoritarianism and world war.

~ Kevin Duffy, "Great Expectations: Handicapping Trump 2.0," The Coffee Can Portfolio, December 20, 2024

Robert Murphy on free trade and the fallacy of reciprocating trade

In general, the case for free trade does not assume the other trading partners are reciprocating...  Just like, you're the coach of a basketball team who says, "Hey guys, I want to pass a lot.  That's how we're going to improve our competitiveness.  And we're going to be more successful on the court if we pass a lot rather than always just giving the ball to our star player and him trying to drive all by himself and just go shoot."  And you wouldn't say, "I don't know, coach, what if we're playing against some other team and they just always give it to their star players?  Does that mean we should reciprocate?"...  No, there are lots of situations where, if something makes sense to do, it doesn't matter if the other team's being stupid.  The smart thing for you to do is still the smart thing for you to do.  That's what the standard case for free trade is.  You're not making your people richer by imposing an extra tax in between them and potential sources of supply.

~ Robert Murphy, "Correcting Vivek Ramaswamy & Charlie Kirk on Tariffs," infineo, November 8, 2024

David Bergland on free trade and peace

Free trade is a powerful inducement to international peace.  Any time a trade barrier is removed, increased trade follows and the people who engage in it are more prosperous.  When people in different countries are able to trade freely with each other, they do not want their beneficial trade relationships interrupted by war.

It is an interesting historical fact that the U.S. government has never gone to war with another government while free trade relationships existed between them.  History also shows us that governments tend to follow the lead of other governments where trade barriers are concerned...  Removing trade restrictions would be the single most efficient way to improve the prosperity of Americans and others, and to improve the relationships between Americans and people of different countries.

~ David Bergland, Libertarianism in One Lesson, pp. 33-34

Ludwig von Mises on how nationalists and classical liberals view free trade

The nationalists stress the point that there is an irreconcilable conflict between the interests of various nations, but that, on the other hand, the rightly understood interests of all the citizens within the nation are harmonious.  A nation can prosper only at the expense of other nations; the individual citizen can fare well only if his nation flourishes.  The liberals have a different opinion.  They believe that the interests of various nations harmonize no less than those of the various groups, classes, and strata of individuals within a nation.  They believe that peaceful international cooperation is a more appropriate means than conflict for the attainment of the end which they and the nationalists are both aiming at: their own nation's welfare.  They do not, as the nationalists charge, advocate peace and free trade in order to betray their own nation's interests to those of foreigners.  On the contrary, they consider peace and free trade the best means to make their own nation wealthy.  What separates the free traders from the nationalists are not ends, but the means recommended fo attainment of the ends common to both.

~ Ludwig von Mises, Human Action, p. 183

1949

Ludwig von Mises on the historical struggle between free trade and imperialism

History is a struggle between two principles, the peaceful principle, which advances the development of trade, and the militarist-imperialist principle, which interprets human society not as a friendly division of labour but as the forcible repression of some of its members by others.

~ Ludwig von Mises, Socialism, p. 268

1922

Phil Duffy on how embargoes have turned out in history

Wikipedia initially blames the Continental System on Napoleon’s Berlin Edict of November 1806 for barring trade with the British Empire. Only later in the first paragraph do we learn that the Berlin Decree was in response to,

… the naval blockade of the French coasts enacted by the British government on 16 May 1806.

Napoleon and his troops ate fairly well, as did the leaders and troops of the British. Both got the external enemy they needed to acquire more power. The British and French people did not fare so well.

The runup to World War I included interference of free trade according to Historic UK:

Britain declared war on Germany on August 4th 1914, but rivalry between the two countries had been growing for years. Germany resented Britain’s control of the world’s oceans and markets, while Britain increasingly viewed a Europe dominated by a powerful and aggressive Germany as a threat which must be contained.

The Mises Institute has a good summary of the situation that led to World War I:

After creating a powerful and industrializing German federation which threatened Europe's "balance of power," Bismarck worked to prevent war. He reconciled Austria, maintained friendly relations with Russia, and got along as well as possible with France. He worked against Germany's "encirclement" by France and an ally-to prevent a two-front war. After Bismarck's dismissal in 1890 by the impulsive young Kaiser Wilhelm II (a crowned TR), German policy drifted into the encirclement Bismarck feared.

Much of the analysis of the runup to World War I focuses blame on Wilhelm II’s clumsy efforts at diplomacy. It seems the theme of Barbara Tuchman’s first chapter in The Guns of August, The Funeral [of Edward VII of Britain]. But a timeline sheds a different light on the matter, with the Entente Cordiale of April 1904 being the leading event. The Gov.UK site states this about the Anglo-Russian Entente of 1907:

On 31 August 1907, Britain and Russia signed an agreement in St Petersburg which put in place the final piece of the alliance system which has widely been considered to have been a major contributing factor regarding the outbreak of the First World War.

There was some real concern in Germany about “encirclement.” It is too easy to become distracted by “Who started World War I?,” and lose sight of the lesson that comes out of that period. Europe had flourished with the defeat of Napoleon at Waterloo and the Congress of Vienna in 1815, which led to Europe’s most peaceful time until the outbreak of World War I in 1914 (Crimean War the exception on the continent). That corresponded with a move away from mercantilism/militarism toward classical liberalism and free trade. Peace and economic flourishing were shattered when mercantilism made its comeback, and the fault may be laid on the leadership of all of the nations involved in that war. The people surely were not seeking war. It was the political elites that wished it and expected to benefit from it. The armistice and Treaty of Versailles did nothing to resolve the underlying problem of economic warfare. After the devastation of Germany and surrounding countries, European leaders finally came to their senses with the Treaty of Rome in March of 1957 which led to the creation of the European Economic Community.

~ Phil Duffy, November 21, 2023

Walter Block on protectionism

Protectionism is a misnomer.  The only people protected by tariffs, quotas and trade restrictions are those engaged in uneconomic and wasteful activity.  Free trade is the only philosophy compatible with international peace and prosperity.

~ Walter Block

Peter Zeihan on incoming President Trump and the end of globalization

Everything about the American position in the international system is based upon the Americans holding together what we currently call the international order.  Americans have been doing this since 1944.  At that point the Americans re-forged the global system, shifting it from a series of warring imperial networks into a global system they personally managed.  The Americans imposed global order — the first global order — and created free trade as a means of purchasing the loyalty of the Western and Asian allies, the defeated Axis powers, and in time Communist China.  It was all about paying for alliance networks to contain and defeat the Soviet Union.  When the Cold War ended the Americans neglected to shift their policies.  The Americans continued to provide global security and empower global trade, but did so without the requisite security quid pro quo. 

People noticed.  The Brazil/Russia/China/India boom could only happen in such a strategic moment in time.  The euro could only exist when economics were protected and security was free.  But it wasn’t just in the wider world that people noticed.  Free trade isn’t really free.  Free trade requires someone providing the physical security and global ballast and market access to indirectly subsidize the rest of the system.  The Americans have provided that for seven decades, and for the last three decades they have done so without asking for anything in return.  With the Trump rise, this whole thing is now in its final years.  Perhaps in its final months.

~ Peter Zeihan, "Scared New World," Zeihan on Geopolitics, November 9, 2016

Kevin Duffy on the national defense case for free trade

Life is about tradeoffs.  Yes, we can protect this or that industry, but there is a cost: lower living standards.  With that comes fewer resources for things like defense. 

Second, where does it end?  Once you start protecting one industry under the national defense excuse, they'll all scream for protection. 

Third, and perhaps most important, the interdependence gained through trade is our best defense!  As Bastiat pointed out nearly two centuries ago, countries that trade with each other have an economic deterrent to fight each other (war is an extremely costly endeavor). 

Fourth, protectionism invites a bigger role for government (which it gladly accepts).  That means less individual freedom and more dependence on government. 

Fifth, the United States has the most defendable position on earth.  We are surrounded by two oceans and two friendly neighbors, account for 40% of global military expenditures, and have an arsenal of nuclear weapons that can wipe out mankind many times over. We also have one of the highest gun ownership rates in the world, a second line of defense. 

Imho, neutrality (which the founders advised) and free trade would make us far more prosperous AND secure.

~ Kevin Duffy, Facebook post, October 18, 2021

Xi Jinping on the relationship betweent the U.S. and China

As economic globalization gathers momentum, China and the United States have become highly interdependent economically.  Such economic relations would not enjoy sustained, rapid growth if they were not based on mutual benefit or if they failed to deliver great benefits to the United States. 

~ Xi Jinping

Sheldon Richman on competition and cooperation being two sides of the free trade coin

Competition is merely part of my being free to decide with whom I wish to cooperate. It really is that simple. The alternative would be some sort of compulsory cooperation, but that doesn't sound so warm and fuzzy anymore, does it?

~ Sheldon Richman, "Libertarianism: A Necessary Review of the Foundations," The Tom Woods Show, September 8, 2020

Boris Johnson makes the case for global free trade

This country is leaving its chrysalis.  We are reemerging after decades of hibernation as a campaigner for global free trade.  And frankly it is not a moment too soon.  Because the argument for this fundamental liberty is now not being made.  We in the global community are in danger of forgetting the insights of those great Scottish thinkers: the invisible hand of Adam Smith, and of course David Ricardo's more subtle, but indispensable, principle of comparative advantage, which teaches that if countries learn to specialize and exchange, then overall wealth will increase and productivity will increase, leading [Richard] Cobden to conclude that,

free trade is God's diplomacy, the only certain way of uniting people in the bonds of peace, since the more freely goods borders, the less likely it is that troops will ever cross borders.

And since these notions were born here in this country, it has been free trade that has done more than any other single economic idea to raise billions out of poverty and incredibly fast.

~ Boris Johnson, U.K. prime minister, "Boris Johnson threatens to collapse Brexit trade talks if EU insist we stick by their rules," 3:00 mark, YouTube, February 3, 2020

Ludwig von Mises: "The market economy involves peaceful cooperation"

The market economy involves peaceful cooperation. It bursts asunder when the citizens turn into warriors and, instead of exchanging commodities and services, fight one another.

~ Ludwig von Mises, Human Action (1949)