Founded in 2012, the R Street Institute is a nonpartisan, nonprofit pragmatic free-market think tank headquartered in Washington, D.C. We support limited but effective government. We believe that economic growth and freedom depends on the relatively free flow of goods between countries and that free trade agreements like the North American Free Trade Agreement (NAFTA) are an integral part of ensuring continued American prosperity.
The case for free trade is twofold. First, the economic benefits are crystal clear. No largely protectionist nation has ever thrived economically. Trade and comparative advantage allow specialization, which leads to better, more efficient outcomes. A recent Peterson Institute study found that the gains for Americans from trade and globalization since World War II have been enormous. The authors note that, measured in 2016 dollars, U.S. gross domestic product per-capita and GDP per-household increased by $7,014 and $18,131, respectively. There is evidence that disproportionate gains accrue to lower-income households. Turning our back on this commitment to largely free, rules-based trade would dramatically decrease American standards of living.
There is an equally strong moral argument for free trade. Tariffs are regressive taxes. They mostly benefit those special interests with sufficiently strong lobbies to secure protection from foreign competition at the expense of those who are forced to shoulder higher costs from restrictions on imports. Free trade also serves to expand freedom by enlarging the sphere of individual and business autonomy outside the scope of governmental decisionmaking. Allowing consumers—both individuals and businesses—to purchase legal goods from outside of the United States if they can find a better price is a net positive for society.
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