Agricultural Economics Department
Date of this Version
7-18-2018
Citation
agecon.unl.edu/cornhuskereconomics
Abstract
Current United States trade policies are in line with an old economic doctrine known as mercantilism which calls for protectionist policies to reduce imports and expand exports with the goal of generating large trade surpluses. This doctrine has been discredited for over 200 years following the analyses of Adam Smith, David Ricardo and other late eighteenth- and early nineteenth century economists. Mercantilist policies by one country not only lower well-being in that country through harm to consumers and industries relying on imported inputs but also almost always lead to trade wars with that country’s trading partners. This is precisely what appears to be happening today. Canada, Mexico, China, the European Union (EU), and other targets of recent United States tariffs have all declared their intentions to retaliate with tariffs of their own and most have also filed complaints about the United States policies with the World Trade Organization (WTO).