Thanks to DDE for bringing this us. I am not going to expound on the benefits of free trade even if it is unilateral because it has been done before from Adam Smith to David Ricardo (the father of comparative advantage) to the sainted Milton Friedman and thinkers lime Pierre Lemieux and most reently Don Boudreaux.
I forgot to mention that Donald Trump has given us an empirical test of unilateral free trade. All of the announced deals feature a US tariff of 15 percent on imported goods with our trading partners assessing a zero tariff on American goods. Let’s see how this turns out.
As to the Chinese theft of property rights (and their hacking) I have long advocated that we should impose severe penalties on them for doing so and sanctions on US firms that allow the Chinese to demand intelletual property as a condition for doing business. Didn’t Tesla tell them to pound sand when the Chinese demanded access to Teslas’s technoloty when they wanted to build a plant in China?
I have posted before on digital sales taxes being imposed on our tech firms by Canada, Britain and the EU.
As to “even the EU won’t take our cars” I will blog on that a bit later as well as the case of agriculture.
Again thanks DDE. I hope this helps and again I welcome all points of view because they help me with mine.
Milton Friedman on unilateral trade
Pierre Lemieux on unilateral trade
haroldblackphd.com 
Why Smith’s Free Trade Argument Doesn’t Fully Apply to Dumping
1**Market Distortions from Dumping**
**Smith’s Assumption**:
Free trade assumes fair competition where prices reflect true costs.
Dumping, often enabled by government subsidies or predatory intent, distorts markets by artificially lowering prices.
– **Reality**: Below-cost sales (e.g., Chinese steel at 30% below production cost in the 2010s) don’t reflect comparative advantage but rather state-backed strategies to capture markets or offload excess capacity. This undermines Smith’s ideal of efficient resource allocation.
**Impact**: As seen in the steel industry, U.S. producers lost 25% of market share pre-tariffs, leading to 50,000+ job losses—hardly the efficient outcome Smith envisioned.
2. **Predatory Pricing and Long-Term Harm**
**Smith’s View**: Inefficient firms should exit, allowing stronger ones to thrive.
– **Reality**: Dumping can be predatory, where exporters aim to drive competitors out, then raise prices once dominance is achieved. This risks monopolies, which Smith himself criticized. For example, Chinese solar panel dumping bankrupted U.S. firms like Solyndra in 2011, reducing competition and innovation. –
**Impact**: The solar industry’s collapse in the EU and U.S. (20,000+ jobs lost) shows how unchecked dumping can destroy viable industries, not just inefficient ones.3.
3**Externalities and National Interests** –
**Smith’s Focus**:
Individual economic freedom and consumer benefits. He didn’t emphasize strategic or social externalities like national security or regional economic stability. –
**Reality**: Dumping can erode critical industries (e.g., semiconductors, where China’s dominance threatens U.S. supply chains). Losing domestic capacity in steel or electronics, as seen with 70% of U.S. electronics jobs offshored by 2010, weakens economic sovereignty and security. –
**Impact**: Agriculture (e.g., Canadian dairy’s $500 million losses from U.S. dumping) shows how rural economies suffer, creating social costs (e.g., unemployment, migration) Smith’s framework doesn’t account for.4.
4**Short-Term Consumer Benefits vs. Long-Term Costs** –
**Smith’s Argument**
Cheap imports lower consumer prices, boosting welfare. –
**Reality**: While consumers initially gain (e.g., cheaper textiles from Asia), long-term costs include job losses, reduced wages, and industry collapse. For instance, U.S. textile jobs dropped from 900,000 to 200,000 by 2010, increasing unemployment and public welfare costs. –
**Impact**: The trade-off isn’t just efficiency but economic stability—regional downturns in places like the U.S. Rust Belt show broader societal losses outweighing short-term price benefits.
5. **Modern Trade Rules and Reciprocity** –
**Smith’s Context**: 18th-century trade lacked global frameworks like the WTO, which Smith didn’t anticipate.
**Reality**:
WTO rules allow anti-dumping measures (Article VI of GATT) because even free-trade advocates recognize that dumping violates fair competition. Smith’s era had no equivalent to state-driven overcapacity (e.g., China’s steel production, 50% of global supply).
– **Impact**
Without measures, industries like EU chemicals (10,000 jobs lost to Russian dumping) would face unchecked decline, contradicting the WTO’s balance of free and fair trade.
Why Measures Are NecessaryGiven the impacts outlined previously—market share losses, job cuts, business closures, and strategic vulnerabilities—inaction against dumping exacerbates harm that Smith’s idealized markets don’t account for:
**Steel**: Without U.S. tariffs in 2018, the industry faced $1-2 billion annual losses, threatening 70% capacity utilization and national security (steel is critical for infrastructure). –
**Solar**: EU and U.S. manufacturers lost 90% of market share to Chinese dumping, stifling green tech innovation. –
**Textiles**: Mexico’s 300,000 job losses post-NAFTA show how dumping devastates labor-intensive sectors, increasing poverty. –
**Agriculture**: New Zealand’s dairy sector lost 10% market share to EU dumping, risking food security and rural economies.
Balancing Smith’s Ideas with Modern Realities
While Smith’s free-trade principles promote efficiency, they assume fair competition and don’t address deliberate market distortions or externalities like national security. Measures like anti-dumping duties (e.g., EU’s 2023 steel tariffs) or industry support (Japan’s semiconductor subsidies) protect domestic economies without fully abandoning free trade. They align with WTO rules, ensuring fairness while preserving competition.
Recommendation To reconcile Smith’s ideas with modern needs
1. **Targeted Trade Remedies**: Use WTO-compliant anti-dumping duties to correct distortions, as seen in U.S. steel tariffs restoring 10,000 jobs.
2. **Support Competitiveness**: Invest in domestic industries (e.g., R&D tax credits) to align with Smith’s efficiency goals while countering dumping’s harm.
3. **Diplomatic Engagement**: Negotiate with dumping countries to address root causes (e.g., China’s overcapacity), maintaining trade openness.If you want a deeper analysis of a specific industry or a case study to test Smith’s theories against dumping, let me know—I can pull data or examples!
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I’m impressed!
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Did you use AI? If so which one do you recommend? Thanks.
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