The Trump administration has recently signed two executive orders to increase the enforcement of tariffs.
On Friday, President Donald Trump signed two executive orders, which focused on fulfilling key campaign promises he made to make trade more fair.
The first executive order commissioned a report on trade practices that contribute to the trade deficit. The second executive order seeks better collection of anti-dumping and countervailing duties.
Many United States firms, such as Uniqlo, were surprised by these new regulations, fearing increased operation costs. The Uniqlo CEO threatening to pull out of the US market. While this may seem like a surprise to many investors as well as consumers, the unfortunate reality is that countries around the world are adopting more protectionist (higher tariff and duties) as a result of both left and right wing governments whom are skeptical of free trade and want to protect domestic manufacturing and agriculture.
While most economists unanimously agree that free trade is a more optimal economic policy as a result of principles such as comparative advantage, I feel many people are overlooking one very significant benefit of free trade; its promotion of peace. Historically important political thinkers like Richard Cobden promoted free trade as a way to bring peace between nations. Cobden an Englishman, was instrumental in passing a trade deal with France in 1860. Since the passage of this trade deal there has never been a war between France and the UK. Fast forward a century, and free trade has become the norm for major regions around the world. With North America, Europe, and many Asian countries adopting less regulation and tariffs for international trade. In turn, there has been relatively little major conflict between such nations that refuse to trade with each other. All this has been changing in the past few years with governments around the world expressing desire to return to protectionist policies. And with this there has been an escalation in nationalist and militant rhetoric. This is seen in its most extreme form in countries that trade very little or do not trade with each other. Notable examples include Iran and Israel as well as India and Pakistan.
As long as two countries don’t trade with each other, their likeliness for conflict is increased dramatically. However this subject receives little press time, most concerns regarding trade have to do with employment and trade deficits in the country adopting the protectionist measure. This is however only one factor out of many important considerations when adopting such a policy.