Global trade freedom has fallen for the third straight year and is at its lowest level since 2006. For countries around the world, that means higher tariffs and nontariff barriers than in the past. For families and businesses, it means that trading is more difficult and costly. The downward trend in trade freedom started well before the coronavirus pandemic, but a worldwide combination of pandemic-related business shutdowns and economic struggles has caused global goods trade to contract.
Initially, many countries responded to the pandemic and increased demand for medical goods—such as face masks and ventilators—with trade measures that restricted the free movement of those products. While many of those measures were eventually removed, they undoubtedly made it more difficult for products to go where they were most needed. Economic recovery discussions in the U.S. and around the world are now focusing on how to prevent such a recession in the future.
While countries may be tempted to close themselves off to the world and international supply chains, doing so will make it more difficult and more costly for their citizens to get what they need. The Heritage Foundation’s Index of Economic Freedom has demonstrated for more than 25 years that economic openness yields better results for individuals around the world. The same is true for countries that reduce barriers to trade and allow individuals to exchange freely with the world. Policymakers around the world should work to eliminate barriers to trade as economies recover from the pandemic.
To read the full issue brief, click here.IB6026_0
Tori K. Smith is a Jay Van Andel Trade Economist for The Heritage Foundation.