Opponents of free trade–including those who opposed to the important trade deals that passed last week–often argue that “unfair” foreign competition has the potential to harm local businesses and destroy jobs.
But a new Heritage Foundation study reveals a very different picture. Heritage’s Bryan Riley and Terry Miller illustrate the benefits of free trade:
Special interest groups often complain that “unfair” foreign competition destroys jobs, but countries with the highest trade barriers have nearly twice the unemployment rate of countries with the most trade freedom. In the United States, the trade deficit and the unemployment rate usually have an inverse relationship. When the trade deficit increases, the unemployment rate decreases, and vice versa. For example, in 2009, the U.S. trade deficit shrank by 46 percent, and the unemployment rate increased by 60 percent.
The report also notes that trade opponents claim free trade agreements only benefit the rich and corporations. But this ignores the fact that poverty rates are lower in countries with low trade barriers–meaning everyone benefits from access to goods from abroad.
In the face of America’s massive deficit, the government should not sacrifice the potential for economic growth through tariffs and trade regulations. Jobs will be generated, but only if the market is fueled by the freedom and opportunity that free trade provides.
What do you think? Should America engage in more free trade?