- May 14, 2025
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In any discussion to understand free trade, protectionism and tariffs, there is no debate among credible economists: Free trade: good; protectionism and tariffs: bad.
Likewise on these subjects, there are a few names that would (and should) top any list of free trade Hall of Famers — economists who have seen, studied and can explain how tariffs never end well.
On that list: Adam Smith, Frederic Bastiat, Milton Friedman, Henry Hazlitt and the famous Austrian economists Ludwig von Mises and Friedrich Hayek.
To that end, what follows are excerpts on trade and tariffs from the books, essays and speeches from these and other Hall of Famers, past and present.
Each of them makes the case for free trade in terms the average layman can understand. While Adam Smith may be the most historically quoted economist on free trade and capitalism, two of the clearest writers ever on the topics are the late journalists Bastiat (1840-1850) and Hazlitt (1940s).
Bastiat has been called the greatest exposer of economic fallacies and the most powerful champion of free trade ever on the European continent. His “What Is Seen and What Is Not Seen” and “Protectionism and Communism” and Hazlitt’s book, “Economics in One Lesson,” should be required reading for everyone — including Donald Trump and his trade advisers. They are so crystal clear in pointing out the fallacies and harms of tariffs.
There is a lot to read here. Even if you pick and choose a few, you should be convinced that Trump is wrong on tariffs. Reading all of them is a worthwhile education to understanding economics, how everyone benefits from free trade and, as the late Austrian economist Ludwig von Mises put it: “Government is essentially the negation of liberty.”
From the manifesto of “The Association for Free Trade (1848-50)
Exchange, like property, is a natural right. Every citizen who has produced or acquired a product should have the option of applying it immediately to his own use or of transferring it to whoever on the face of the earth agrees to give him in exchange the object of his desires.
To deprive him of this option when he has committed no act contrary to public order and good morals, and solely to satisfy the convenience of another citizen, is to legitimize an act of plunder and to violate the laws of justice.
“Human Action” (1946)
“Economics in One Lesson” (1946, 1962, 1978)
“In every country it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest.
“The proposition is so very manifest,” Smith continued, “that it seems ridiculous to take any pains to prove it; nor could it ever have been called in question, had not the interested sophistry of merchants and manufacturers confounded the commonsense of mankind.”
“It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.
“The tailor does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his own clothes, but employs a tailor. The farmer attempts to make neither the one nor the other, but employs those different artificers.
“All of them find it for their interest to employ their whole industry in a way in which they have some advantage over their neighbors, and to purchase with a part of its produce, or what is the same thing, with the price of a part of it, whatever they have occasion for.
“What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom.”
“The Road to Serfdom” (1944; 2007 Introduction)
“Capitalism and Freedom” (1962, 1982, 2002, 2020)
Given that we should move to free trade, how should we do it?
The method that we have tried to adopt is reciprocal negotiation of tariff reductions with other countries. This seems to me a wrong procedure.
In the first place, it ensures a slow pace. He moves fastest who moves alone. In the second place, it fosters an erroneous view of the basic problem. It makes it appear as if tariffs help the country imposing them but hurt other countries, as if when we reduce a tariff we give up something good and should something in return in the form of a reduction in the tariffs imposed by other countries.
In truth, the situation is quite different.
Our tariffs hurt us as well as other countries. We would be benefited by dispensing with our tariffs even if other countries did not. We would of course be benefited even more if they reduced theirs, but our benefiting does not require that they reduce theirs. Self-interests coincide and do not conflict.
“Protectionism and the Destruction of Prosperity” (1986)
We are not, if we were ever, a world of self-sufficient farmers. The market economy is one vast latticework throughout the world, in which each individual, each region, each country, produces what he or it is best at, most relatively efficient in, and exchanges that product for the goods and services of others.
Without the division of labor and the trade based upon that division, the entire world would starve.
Coerced restraints on trade — such as protectionism — cripple, hobble and destroy trade, the source of life and prosperity.
Protectionism is simply a plea that consumers, as well as general prosperity, be hurt so as to confer permanent special privilege upon groups of inefficient producers, at the expense of competent firms and of consumers.
But it is a peculiarly destructive kind of bailout, because it permanently shackles trade under the cloak of patriotism.
Hoover Instituttion (April 15 interview)
If you set off a worldwide trade war, that has a devastating history. All that happens is you get a great reduction in international trade.
It’s disturbing in another sense. Franklin D. Roosevelt, when he was president in the 1930s, said you have to try things. And if they don’t work, then you admit it. You abandon that and go onto something else. You try that until you come across something else that does work.
Now that’s not a bad approach if you are operating within a known system of rules. But if you are the one who is making the rules, then all the other people have no idea what you’re going to do next. And that is a formula for having people hang on to their money until they figure out what you’re going to do.
And when a lot of people hang onto their money, you can get results such as you got during the Great Depression of the 1930s.
So if this is just a set of short-run ploys, with objectives limited in time, fine. Maybe. But if this is going to be the policy for four long years, that you’re going to try this, and you’re going to try that, you’re going to try something else, a lot of people are going to wait.
Inventor of “Supply-Side Economics” (Interview, April 22)
CATO Institute (April 21)
“Trying to ‘Bring Back’ Manufacturing Jobs Is a Fool’s Errand”
[W]hat’s encouraging is that more and more polls suggest Americans understand these trade policies are harmful. And one explanation could be that most Americans recognize that service jobs are good.
In other words, even though the Trump administration seems bent on “bringing back” manufacturing jobs to the United States, most Americans recognize that service sector jobs have already made America great.
You’d never guess it from all the political rhetoric, but service sector jobs have always been a major factor in America’s success.
As I explain in my new book, “Crushing Capitalism,” service jobs have accounted for a larger share of the U.S. labor force than heavy industry since 1840, and a larger share than agriculture since the early 1900s. Similarly, the service sector’s share of total output exceeded heavy industry’s share during most of U.S. history, with the only exception being a brief period around 1890.
Advocates of recent populist policies like to focus on the supposed demise of manufacturing that occurred after the 1970s, but that focus is misleading. Aside from the perpetual importance of the service sector, reliance on manufacturing jobs steadily declined long before the 1970s. …
Trying to “bring back” manufacturing jobs, through harmful tariffs or other industrial policies, is destined to end badly for Americans. It makes about as much sense as trying to “bring back” all those farm jobs we had before the 1870s.
