Trade Restrictions Will Not Improve National Security


One of the most persuasive arguments trade protectionists use is the national security argument. It serves as a “get out of jail free” card with many conservatives, and progressives will also often let slide policies with national security implications. When it comes to trade, it turns out that not only do trade barriers fail to improve national security, they actually hurt it in the long run—as Iain Murray and I briefly spell out why in our recent study, “Traders of the Lost Ark.”

When a country goes to war, one of its first actions is to blockade the opposing country’s trade. If protectionist logic held, this would stimulate the blockaded country’s domestic industry to new heights.

There is also the matter that an effective blockade is impossible in a global market:

As noted, trade helps industries diversify their supply chains. China might refuse to sell steel to the U.S., but some steel buyers would happily turn around and resell Chinese steel to American buyers for a profit. The OPEC oil cartel learned this lesson the hard way, when its own member countries undercut its attempts to fix the global price via restricted supply.

But suppose an effective blockade were in place. Without trade barriers to ensure a viable domestic industry, how would the military fare? Quite well, as it turns out. The U.S. military is the world’s largest. In fact, it is so large that it outspends the world’s next seven largest militaries—combined. Even at its current size, the military only accounts for about 3 percent of domestic steel consumption. Automobile production uses 26 percent, or almost 9 times as much. Construction uses 40 percent, or more than 13 times as much steel as the defense industry. Security hawks should be arguing against steel tariffs, not for them.

Finally, politicians often play the national security card frivolously. This hurts foreign relations, not just the economy. President Trump, for example, cited national security concerns in raising steel tariffs against Canada. When Canadian Prime Minister Justin Trudeau asked Trump during a phone call what national security threat Canada posed to the United States, Trump was reduced to mumbling something about the War of 1812. The phone call was an embarrassing and avoidable low point in relations with our closest neighbor and one of our staunchest allies in the world.

In sum, national security concerns do not justify trade barriers. By harming growth, they leave fewer resources available for defense. Blockades are impossible in a global market. And even if they were, the U.S. has more than ample infrastructure to meet any military needs domestically. And by sending negative foreign policy signals, trade barriers strain relations with needed allies and make war with enemies more likely, not less.

For more, read the full “Traders of the Lost Ark” study.