American Trade

Deepak Lal ( In Praise of Empires: Globalization and Order ) argues that after WW II, the US missed the opportunity to adopt unilateral free trade policies, as Britain did in the 19th century.

“Rather than follow the correct British policy of adopting unilateral free trade and then allowing its hegemony to spread the norm, the United States chose the extremely acrimonious route of multilateral and more recently bilateral negotiations to reduce trade barriers. This is due to the fact that, unlike the British who have correctly seen free trade not as a zero-sum game and . . . the Americans have never accepted the classical liberal case for free trade. They have always looked upon trade as a zero-sum game. They have been protectionist,” apart from “a brief period between 1846 and 1861.” In 1901, TR stated the guiding principle: “Reciprocity must be treated as the handmaiden of Protection. Our first duty is to see that the protection granted by the tariff in every case where it is needed is maintained, and reciprocity be sought so far as it can be safely done without injury to our home industries.”

This is counterproductive, Lal argues: “by perpetuating the myth that trade is a zero-sum game and that removing tariffs can only be done on the basis of reciprocity, the United States has endured that issues of domestic policy will inevitably spill over into trade policy.” He notes the ironic fact that “one of the largest unilateral movements to free trade has occurred in China since Deng Xiaoping adopted the Open Door policy.”