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Milton Friedman on Trade and tariffs

What we send abroad we can’t eat, we can’t wear, we can’t use for our houses. The goods and services we send abroad are goods and services not available to us. On the other hand, the goods and services we import, they provide us with TV sets we can watch, with automobiles we can drive, with all sorts of nice things for us to use. The gain from foreign trade is what we import. What we export is the cost of getting those imports, and the proper objective for a nation, as Adam Smith put it, is to arrange things so we get as large a volume of imports as possible for as small a volume of exports as possible.

Context. From a lecture on free trade, just after he says that public talk of trade treats exports as good and imports as bad, which he calls “just upside down.”

Milton Friedman Speaks: Free Trade: Producer vs. Consumer
Lecture, 1978, Lecture 8, at 21:30
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Milton Friedman, “Milton Friedman Speaks: Free Trade: Producer vs. Consumer” (1978), Lecture 8, at 21:30. https://miltonfriedman.org/quotes/gain-from-foreign-trade-is-what-we-import-1978

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He also said

  1. Another fallacy seldom contradicted is that exports are good, imports bad. The truth is very different. We cannot eat, wear, or enjoy the goods we send abroad. We eat bananas from Central America, wear Italian shoes, drive German automobiles, and enjoy programs we see on our Japanese TV sets. Our gain from foreign trade is what we import. Exports are the price we pay to get imports. As Adam Smith saw so clearly, the citizens of a nation benefit from getting as large a volume of imports as possible in return for its exports, or equivalently, from exporting as little as possible to pay for its imports.

    Context. From Free to Choose (1980), written with Rose D. Friedman, in the chapter “The Tyranny of Controls”, on international trade.

    Free to Choose
    Book, 1980, Ch. 2 “The Tyranny of Controls”, p. 41
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  2. The key insight of Adam Smith's Wealth of Nations is misleadingly simple: if an exchange between two parties is voluntary, it will not take place unless both believe they will benefit from it. Most economic fallacies derive from the neglect of this simple insight, from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another.
    Free to Choose
    Book, 1980, Ch. 1 "The Power of the Market", p. 13
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  3. For example, the supporters of tariffs treat it as self-evident that the creation of jobs is a desirable end, in and of itself, regardless of what the persons employed do. That is clearly wrong. If all we want are jobs, we can create any number—for example, have people dig holes and then fill them up again, or perform other useless tasks. Work is sometimes its own reward. Mostly, however, it is the price we pay to get the things we want. Our real objective is not just jobs but productive jobs—jobs that will mean more goods and services to consume.
    Free to Choose
    Book, 1980, Ch. 2 “The Tyranny of Controls”, pp. 40-41
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