American Prosperity Depends on Free Trade – The American Spectator | USA News and PoliticsThe American Spectator

The United States is the world’s largest economy, in terms of GDP, with a recent value of $27.72 trillion. What explains American economic success? The answer is quite simple: free markets that transcend local, state, and national lines.

As the world’s largest importer of both goods and services, the world’s largest exporter of services, and the world’s second largest exporter of goods, the U.S. is arguably the most interdependent economy of all time. Americans imported, for instance, $3.29 trillion in goods in 2024, mostly from the European Union, Mexico, China, Canada, Germany, South/Central America, and Japan, while also importing $812 billion in services, mostly from the European Union, South/Central America, the United Kingdom, Canada, and Mexico. (RELATED: Elon Musk Channels Milton Friedman’s Pencil: The Message of Free Trade)

Being free to buy from foreign producers makes us wealthier than we otherwise would be. American businesses can specialize in producing what they do best while relying on other specialists, from around the world, to supply components, parts, technologies, and other resources that enter the production of American-made goods and services. (RELATED: The False Promise of President Trump’s Trade Policies)

Specializing in what you do best means you are specializing in your comparative advantage. Your comparative advantage is the good or service that you can produce at a relatively lower cost than someone else. If, John, an American producer of BBQ grills can buy steel grates from an Asian manufacturer at a lower cost than an American competitor, or at a lower cost than John can manufacture in-house, he can ultimately specialize in assembling his BBQ grills, enabling him to produce a larger supply at a lower cost that justifies lower prices for his customer.

When individuals and businesses specialize according to their separate comparative advantages, we get more of the goods and services we value at a lower cost. We are made better off — wealthier, that is — through free trade. More resources are freed up to be devoted to other projects, for other purposes.

It is impossible for Americans to produce everything we consume, or everything we use as inputs in our production, while maintaining our current level of wealth. Approaching economic self-sufficiency — through tariffs and other protectionist policies — makes use poorer, not wealthier. Protecting American businesses from foreign competition maintains production in certain areas where businesses have a comparative disadvantage.

Foreign competition — just like competition from domestic producers and new technology — tends to shift resources into areas in which Americans have a comparative advantage. Protection prevents this economic process, thereby limiting the extent of our markets, raising our costs of production, and making us worse off. We end up using more resources to produce the same amount, if not fewer, goods and services.

Certain American businesses can indeed become global market leaders, but it’s not going to come about by closing off our international resource markets or making foreign-produced goods artificially more expensive. We can achieve greater prosperity by enabling our businesses to buy the inputs they need from the suppliers they expect will add the most value at the lowest cost. American prosperity depends on free trade, whether that trade crosses local, state, or national lines.

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