Why is free trade good?

By A.F.

PROTECTIONISM is back. On March 8th President Donald Trump signed into law tariffs of 25% on steel imports and 10% on aluminium, to come into effect two weeks later. It is unclear which countries will be hit. Even if exemptions are expanded beyond Mexico and Canada, this is still a big step for the president to take. Mr Trump tweets that this is for the best. By levying these tariffs, the story goes, the American economy will be better off because jobs in the steel and aluminium sectors will return to the homeland from foreign countries that have “stolen” them. Such thinking has traditionally been known as “mercantilism” and it is easy to see why it appeals. We buy things from that country, instead of making them ourselves. If we made them ourselves, we would have more jobs and this would make us better off. So why is the mercantilist argument wrong?