When unilateralism is good

In light of the apparent collapse of the most recent round of trade talks, it’s worth reiterating a point I’ve made before: The talk about various countries making “concessions” by, say, lowering tariffs is misleading, at least if you take an orthodox free trade approach. According to free trade theory, a country benefits from lowering its trade barriers even if others don’t because it gets goods more cheaply than it would have otherwise.

Tariffs benefit one small concentrated group of people (producers) at the expense of another, larger, more diffuse group (consumers). This may make sense as policy in some cases, but it’s not accurate to say that, as a general rule, tariffs benefit the country as a whole. For one country to make eliminating trade barriers contingent on other countries doing the same just shows it doesn’t really believe in free trade. If free trade theory is right, then unilaterally lowering trade barriers is a good idea regardless of what other countries do.

P.S. Matthew Yglesias makes substantially the same point here.