Economist Writing Every Day

How much does the US and our trading partners adhere to the principles of free trade? The Fraser Institute’s Economic Freedom of the World report includes a category that helps to answer this question. Fraser’s measure includes not just tariff rates, but also non-tariff barriers, trade regulations, black market exchange rates, and controls on the movement of capital and people. Each country is assigned a score from 0 to 10, with 10 being the most freedom to trade internationally.

Overall, the US gets a pretty good score, slightly over 8 out of 10, which ranks us as the 53rd most free trading country in the world (data from 2022). That’s pretty good, but clearly not the most open: 52 countries have more trade freedom! Here’s how the US and our 10 largest trading partners look on that measure (I’ve truncated the axis to show roughly the current range of country scores worldwide):

Countries/regions with the highest scores on this measure are Hong Kong and Singapore, and almost every European country scores higher than the US.

What if we just look at tariffs? The US has a slightly higher score at 8.3 out of 10, but our rank on tariffs is slightly lower at 59th most free in the world (this includes not just tariff rates, but also the standard deviation of tariff rates and revenue from the trade sector).

Relative to our largest trading partners, the US does look better on this subcomponent for tariffs, but is still lower than some of our trading partners (note the axis is slightly different than the first chart, to once again roughly show the international range on this measure):

Finally, we might be interested in how much these scores have changed over time. You might sometimes hear that the US has opened up more to trade, while the rest of the world has moved in the opposite direction. This might be true on some margins, but not overall according to the Fraser scores. I use 1990 as the baseline, which is before a lot of the free trade agreements and WTO changes that would happen over the next decade or so (Fraser has no data for Vietnam in 1990, so they are excluded):

Overall, the US and our major European trading partners have reduced the ability of their citizens to trade internationally, while places like China and India have opened up massively to trade. In 1990 China had a mean tariff rate of 40% and India’s was a whopping 79%. Today their tariff rates are still higher than the US: 7.5% in China and 18% in India, compared with 3% in the US. But they are the ones who have massively opened up their economies to international trade, when we consider all aspects of international trade, even if this opening up isn’t as complete as the US. The US ranked as the 12th highest on Fraser’s freedom to trade internationally component in 1990, but is down to 53rd in the most recent data.