As the U.S. Supreme Court is weighing the limits of the executive branch’s authority on tariffs, it is important to consider the tradeoffs that come with free trade. In American political and business circles, free trade has long been the favored mantra. Investors, executives, and most politicians speak of it with near-religious conviction. According to Google Trends, Americans have searched for “free trade” roughly twice as often as for “fair trade” since 2004. Mentions of fair or reciprocal trade, by contrast, are far rarer—though Donald Trump managed to raise their profile over the past decade.
This imbalance in attention is not just a matter of economic theory. It reflects the political arithmetic that makes free trade a perennial favorite and fair trade a hard sell in Washington. This arithmetic follows an old Chinese proverb: “It is better to break one finger than to injure ten” (伤其十指，不如断其一指). But doing this can land the American economy in a ditch.
Politicians rarely lose votes backing free trade, because the numbers—of voters, donors, and dollars—tilt decisively in its favor. On the one hand, tariffs are the inevitable instrument of fair trade. They help domestic producers compete, reopen shuttered plants, and revive manufacturing towns. They also allow middle-aged steelworkers, for example, to keep well-paying jobs rather than take minimum-wage ones.
But tariffs come with visible costs on the other hand. Importers pay first, then try—often unsuccessfully—to pass them along to consumers. Exporters and original equipment manufacturers absorb another share to keep their business. Eventually, the burden ripples through currencies, supply chains, and countries. As such, tariffs are not exactly a tax on consumers in the conventional sense, even though consumers may and frequently do end up paying higher prices.
As a result, politicians follow the Chinese proverb instinctively: higher tariffs hurt many consumers a little, but help a few workers a lot. Lower tariffs, meanwhile, help many consumers a little, but hurt a few workers a lot. Faced with a choice between slightly annoying millions or devastating thousands, politicians will choose the latter. They’d rather break one finger than to injure ten. And so, free trade wins.
There’s more. Advocating free trade is not only politically safer—it’s more lucrative. Campaign donations tend to flow from the beneficiaries of global capital mobility, not from the victims of industrial decline.
Free trade in America, of course, does not mean reciprocal trade. Foreign firms often enjoy wide access to U.S. markets, while American companies face high barriers abroad. This asymmetry gives foreign producers a structural advantage. They can exploit scale economies, invest more heavily in innovation, and recruit global talent—all while American firms face shrinking market share.
Imagine a pharmaceutical company in New Jersey with a patented drug. If it produces in the U.S., it can sell domestically—but faces steep tariffs abroad. If it produces, say in China, however, it can sell both in China and in the U.S. tariff-free. The “giant sucking sound” Ross Perot once warned about is the sound of capital following profits—away from American workers and communities.
As JPMorgan’s Jamie Dimon recently lamented, “It’s a little embarrassing that we as a nation allowed 100% of our penicillin to come from China, and all of our rare earths, and all of our advanced chipmaking tools. We need to get our act together.”
Yet the arithmetic of modern politics stands in the way. Capital is mobile; labor is not. Free trade enriches many investors by a small margin but impoverishes some workers by a large one. Fair or reciprocal trade, conversely, would slightly reduce returns for many investors to substantially improve conditions for a few workers. Given that political campaigns depend on money more than on gratitude, it’s easy to see which side wins.
The irony is that by repeatedly “breaking one finger to save ten,” we may end up with none. Each individual decision to favor capital over labor, imports over production, or global supply chains over domestic resilience may seem compelling and rational in isolation. But cumulatively, they hollow out the national hand that once built and held the global economy.
To “get our act together,” policymakers must change the arithmetic itself. Sometimes, it is wiser to “injure ten fingers a little” than to break one entirely. The business community can help by following the lead of companies like Apple—who has pledged to invested $600 billion in four years as part of its new American Manufacturing Program—and JP Morgan Chase—who is committing to facilitating and financing $1.5 trillion in the next decade to support U.S. economic security and resilience.
Efforts like these allow the system to heal and keep all ten fingers intact. It’s time policymakers, business communities, and even consumers do the right thing and give fair trade a chance, even if it means we all must make some small sacrifices.
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