International Trade

Basic Argument

  • Free trade vs. Protectionism

    • People who want to trade vs. people who want restrictions

  • “Do what you do best and trade for the rest!”—Free Trade Mantra

    • Free trade = specialization

Roots of Economic Prosperity

  • Private prosperity

    • And its protection

  • Rule of Law

    • Everybody under the sun (including the government) obey law

  • Political stability

USMCA = 

Domestic vs. International Trade

Differences / challenges of international trade

  • Logistics

  • Customs / religions

    • Holidays

    • Male / female

  • Currency

  • Tax issues

  • Government / political

  • Communication / language

  • Work policies

    • Age, hours, conditions

The Lesson of Smoot-Hawley — Too much restriction is a bad thing

Barriers to Trade

  • Tariffs (taxes)

    • Revenue Tariffs

    • Protective Tariffs

  • Embargo (no trade)

  • Quota (limits)

  • Voluntary restrictions (negotiation)

Arguments Against Free Trade (protectionism)

  • Jobs argument 

    • Importing too much costs Americans jobs

    • Need to protect

    • This is a big issue

  • Dumping

    • One country dumps a bunch of stuff into another for a lower cost

    • Selling product in foreign countries for less than production costs in home countries

  • Military self-sufficient

  • Infant industry

    • Start-up industries in their infant stages

  • Licensing / quality issues

General Topics

  • What do countries export?

    • Various goods

    • Services

  • What does immigration really mean?

    • Export of workers form country of origination

  • Mexican trucking issue

Remittances

  • Dollars returned to “home” countries

    • i.e.: Mexico

      • $$ returned to Mexico by workers in U.S. simplified in 2001 — Bush / Fox agreement 

        • 2024—$68 Billion

        • 2022—$58.4 Billion

        • Top 15 countries = $500 Billion

What’s a Foreign Car?

What determines what a foreign car is?

  • Where is it built?

  • Where do the parts come from?

  • Where do the profits go?

When a tariff is added, who is hurt / helped?

  • Consumer—HURT

  • Domestic producer—HELPED

  • Government—HELPED (tariff revenue)