Advocates of free trade ought to articulate an alternative to tariffs

The flaws of US trade policy can easily be identified but the challenge lies in addressing its concerns

- DAMBISA MOYO

In this era of protectionism, defending globalization can feel like a losing proposition. But rather than retreat from the debate, it is more urgent than ever to spell out the costs of a trade war, which threatens to accelerate the fragmentation of the global economy because it is really a war on trade itself. To challenge the logic behind the US administration's protectionist agenda effectively, we must first understand it in clear and concrete terms.

The US tariff regime stands on four arguments. The first is that tariffs will boost government revenue and help reduce the US budget deficit, which many economists see as unsustainable. The Congressional Budget Office expects the federal deficit, currently at 6.4% of GDP, to remain above 6% through 2035, notably higher than the 50-year average of 3.8%.

High deficits could limit the ability to sustain key entitlement programmes. To prevent that outcome, US Treasury Secretary Scott Bessent has vowed to reduce the fiscal deficit to 3% of GDP by 2028, using tariff revenues as a tool. Tariffs, the argument goes, will generate revenue from imports that are exempt from federal taxes. The US government also misses out on income and corporate tax revenue that would have been collected if the same goods and services were produced in the US. In theory, tariffs would offset these losses.