Free trade versus protectionism in the freight industry
Trade is central to global economies and getting goods from one place to another, but the limitations on trade change from one government to another.
On this episode of Freightonomics, Zach Strickland and Anthony Smith dive into the differences between free trade and protectionism and how they influence the logistics landscape.
Trade regulations like the Jones Act are supported by the Biden administration; this act in particular is an example of protectionism between United States ports.
Smith says some protectionism can be a drag on economies because it can limit utilization of existing resources instead of flooding the market with those available resources.
Strickland says the domestic implementation of protectionism can lead to trade wars with other countries since it limits outside sources from having an effect on inside trade. However, keeping the economy protected can decrease risk to supply chains while increasing national security.
Smith and Strickland argue that free trade breeds more innovation because you can source from places other than your backyard. Smith says the beautiful thing about free trade is places with fewer production resources can deliver better quality goods to the people who otherwise would miss out.
One last consequence of protectionism is the tendency to favor big business instead of encouraging people to enter the market with their startup ideas.
Smith says “when businesses compete, people win.”