It’s the imports that are the benefit of trade
A little example of what near everyone gets wrong about trade. It is the imports - those things made cheaper by Johnny Foreigner - that are the benefit:
The future of Britain’s bioethanol industry has been thrown into doubt by the UK’s trade deal with America, putting hundreds of jobs at risk, the two leading manufacturers of the fuel have warned.
Sir Keir Starmer’s decision to allow tariff-free access for large volumes of ethanol from American producers completely blindsided Britain’s domestic industry, which fears it will be unable to compete with lower-cost US exports.
As everyone numerate knows bioethanol is a ludicrous product in the first place. Vastly subsidised and often enough more polluting - and more resource hungry - than just burning oil in the first place. But the fools have got it into their heads that we must have it and so on.
So here we have - and this is what is being complained about! - Johnny Foreigner offering us this product cheaper than we can make it ourselves. Further, it’s Mr Foreigner, J, that has to carry the burden of the subsidies to make it as well, not our own pockets. A double benefit even if the initial idea of having it at all is absurd.
Which is indeed the point of trade. What we send abroad, our exports, is what we have expended our efforts, labour, resources, to produce and someone else gets to consume it. That’s a cost. What they have worked to produce, subsidised, becomes our consumption - the benefit.
There’s only one group for whom this does not work this way. The workers? Trade changes which jobs are done but not the general level of employment - that’s set by the interaction of monetary and fiscal policy. So the only other people left are the capitalists who own those factories. They are also the people doing the complaining here.
Trade restrictions benefit domestic capitalists at the expense of - here - all domestic consumers and all domestic taxpayers who have to support the subsidy to production (that this is largely delivered through ROCs does not change this).
Lifting import restrictions and tariffs benefits consumers and taxpayers and hits domestic capitalists hard. Oh Dear. How sad. Never mind.
Tim Worstall