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NewsTrade and Agriculture

​Trade and Agriculture

March 31, 2017 -

President Trump seems to think that trade can be unfair. The truth is that all trade is fair, as one person willingly gives up something in exchange for something he desires more. If he did not perceive that he would benefit, he would not trade. The fact that some of our trade takes place across bodies of water instead of across state lines or store counters doesn't change this fact.

Trade, whether domestic or international, should always be permitted, even if another country or state imposes taxes or restrictions locally. To reciprocate merely harms both parties trading, as well as citizens who ultimately receive those goods. Hong Kong grew to be one of the wealthiest countries in the world (per capita) while being the only country having no duties, tariffs or other restrictions on trade while its trading partners did.

The benefit of trade is that it enables a division of labor. Standards of living rise as we increasingly specialize in what we produce. Each of us has one specific job, and we take our earnings and exchange it for what others produce, such as houses, food, cars, clothes, air travel, etc. Think how difficult and inefficient it would be for everyone to try to produce all these things for themselves each year instead of engaging in domestic trade. The same logic applies to international trade: some countries produce what they are better at producing while other countries produce other things, and then these goods are exchanged. In this way, the total amount of goods produced is much greater, which means everyone is wealthier. The true benefit of trade is not getting money, per-se, but having additional goods and services at lower prices because more is produced and exchanged.

The U.S. specializes in producing agricultural products, amongst other things, which is mostly consumed domestically. Excess domestic production is exchanged for needed goods produced in other countries. Contrary to conventional wisdom, there is nothing particularly special about agricultural exports—the buyers are simply located across a body of water on land that has a different name. Exports do not affect prices any more than domestic usage does (though during the early 1970s when the gold standard collapsed, countries holding dollars they no longer wanted suddenly had a strong demand to shed them by buying commodities). However, restricting trade in agriculture or any other industry means preventing people in each country from getting the goods they need or want, and forcing them to pay higher prices.


Kel Kelly is GROWMARK's economic and market research manager. His email address is