JAMES CARTER AND SHANKER SINGHAM: We’re Free Traders And Trump’s Tariffs Make Sense

For many of us free traders, the Liberation Day tariffs were a shock. We initially saw the tariffs as a problem and took the view that any deal was good enough as long as it got rid of the tariffs.

Yet, it is possible to remain a free trader while at the same time recognizing there is a brilliant method to President Trump’s seeming madness.

This year’s National Trade Estimate, an “annual report detailing foreign trade barriers faced by U.S. exporters,” ran 397 pages. Given that the barriers contained in that report—the same report Trump waved around when he announced the tariffs—have changed little over the last thirty years, true madness would be continuing to do the same thing as before and hoping a different result would emerge.

Most trade barriers now are not tariffs. China’s average Most-Favored-Nation tariff in 2023 was roughly 7%, but no one would think of China as an open market. The real barriers are behind-the-border regulatory barriers that create huge market distortions.

U.S. firms that have market access because of a low tariff find all kinds of other barriers that prevent them from being able to actually contest foreign markets. For this reason these barriers have been called anti-competitive market distortions, or ACMDs. U.S. exports are undoubtedly suppressed by these ACMDs, and imports into the U.S. are unquestionably enhanced. President Trump is right to call this out.

The heavy stick the president is wielding feels wrong to many of us who grew up on the axiom that lower tariffs and freer trade would inevitably lead to a more prosperous world. It upends our own worldview, but we have to own the fact that our approach has not led to a meaningful reduction of these ACMDs.