Milton Friedman quotes on protective tariffs

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The proponents of protectionism say, “Free trade is fine in theory but it must be reciprocal. We cannot open our markets to foreign products if foreigners close their markets to us.” China, they argue, to use their favorite whipping boy, “keeps her vast internal market for the private domain of Chinese industry but then pushes her products into the U.S. market and complains when we try to prevent this unfair tactic.”

The argument sounds reasonable. It is, in fact, utter nonsense. Exports are the cost of trade, imports the return from trade, not the other way around.

Suppose China were incredibly successful in her alleged attempt to restrict imports into China, managing to dispense with them entirely. Suppose that China were incredibly successful in her alleged attempts to push exports to the U.S., managing to sell us large quantities of assorted goods. What would China do with the dollars she received for her exports? Take crisp greenbacks back to Beijing to stash in the vaults of the Bank of China? Let deposits at U.S. banks pile up? Jolly for us. Can you think of a better deal than our getting fine textiles, shiny cars and sophisticated TV sets for a bale of green printed paper? Or for some entries on the books of banks? If the Chinese would only be willing to keep on doing that, we can provide all the green paper they will take.

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