Myth 3: Our Competitors Are Taking Advantage of Us with Trade Barriers.

This is the third in a holiday-themed series aimed at correcting common misconceptions about trade. Each day until Christmas, economists Christine McDaniel and Veronique de Rugy will address a new claim about trade or tariffs while providing additional resources for those interested in learning more about the topic.

Myth: Our Competitors Are Taking Advantage of Us with Trade Barriers

As the elves will tell you, trade barriers and tariffs have come down dramatically over the years. Today, global tariffs average 5 percent, compared to 22 percent before the founding of the General Agreement on Tariffs and Trade in 1947. Most governments try to keep their protectionist tendencies in check, but there are some pretty high trade barriers still out there. Even America still has some, with its 25 percent tax on light trucks and 300 percent tax on tobacco products. The good news is that if a country is really naughty, others can bring their case to the North Pole of trade enforcement, the World Trade Organization, and they will administer the appropriate fix. 

Suggested Resource

Freakonomics Podcast, "Did China Eat America’s Jobs?"