Tariffs and the Balance of Trade

True enough, our exporters may sell goods to English buyers and get sterling exchange. They may spend this money in France or Germany rather than in England, so that the flow of goods is not directly between England and America. But the same might be true in the trade of apples for dollars. With your two dollars, you probably will buy something from a third party rather than from the man who bought your apples. If we are to buy, we must sell. If we are to export, we must import. It is just that simple. Erecting barriers against imports is just another way of cutting down our exports. ·There will still be a balance, but at a lower level. Actually, tariffs have nothing to do with the balance of trade; they change the amount of trade, but the bal36 ance is still there. The optimum amount of foreign trade for any nation is that amount which will occur volun tarily when there are no artificial barriers to trade. It must be kept in mind that the term trade as used here refers to all exchanges-including services or travel or money or other types of "invisible" trade, as well as goods. The term refers to economic balance, rather than to physical balance.