We Can’t Afford Not To Trade

By George A. Pieler, IPI senior fellow, and Jens F. Laurson, editor-in-chief of the International Affairs Forum

With world financial markets plummeting and markets everywhere reflecting the certainty of a widespread recession, the only question is: why would any responsible person advocate further US restrictions on international trade?

An economic downturn, with less buying power here and abroad, triggers less buying and selling across borders and within borders.  

While it’s too late to change the near-term trajectory of the economy, recovery will be slower if the US signals that it is no longer interested in championing free trade (not that we do so perfectly). As for new restrictions:   that’s what helped catapult us into the Great Depression long after the stock market recovered.  

How foolish, then, to ignore the contribution of public policy to the swift economic downturn, and its potential to inhibit recovery.   With higher debt being certain, and higher taxes very likely in America ’s short-term economic future, more trade friction would complete the anti-growth trifecta. It simply mustn’t be risked.   It’s no accident that American companies seek foreign investment ( China comes to mind) to bolster their balance sheets, and rising US debt needs overseas buyers.   It’s not as though we can separate our openness to investment capital from our openness to goods and services from abroad.

Hopefully the G7 finance ministers, who just agreed on market-calming measures, grasp the lunacy of trade restrictions at any, but especially this time.   If ever free-flowing trade and investment were absolutely vital to our economic health, it’s right now.