by Edward Hudgins, Ph.D.
April 16, 2025
The Trump administration has imposed high tariffs on imports—taxes paid for by American consumers and businesses—on the excuse that other countries impose higher tariffs on their imports from us—which punish their own people—or engage in unfair trade practices.
But the Heritage Foundation’s Index of Economic Freedom—my idea when I worked there around 1990—tells a very different story. The “trade freedom” factor is “a composite measure of the extent of tariff and nontariff barriers that affect imports and exports of goods and services.” The Index shows that while the U.S. scores a 75.6 out of 100, some 67 countries out of 184 had better scores, meaning more open markets. All European Union countries plus Canada have more trade freedom than us. The bête noire China scores 74 compaired to our 75.6, though only eight countries below us separate us from China.
Of course, Pres. Trump’s “reciprocal tariffs” chart is not about reciprocal tariffs. FYI: One World Bank index puts America’s tariff rate at 1.47% compared to the EU’s 1.39% and the UK’s .72%, though China’s is 2.32%. The chart reflects the ratios it would take to have trade balances with individual countries. But such balances as such mean nothing. I‘ve a trade deficit with my grocery store. They buy nothing from me. I have food and they have my money. So what? It would be economic suicide for the U.S. to seek such trade balances.
Most cars assembled in America have many or most parts from Canada, Mexico, or elsewhere. Imagine an American auto firm being told by an overseas supplier “Sorry, our government says we can’t sell you those parts because your country would then have a trade deficit with us, and your government will retaliate.” Multiply this mess by nearly 200 countries and millions of attempted trades. And no, we can’t just make everything here. The administration rightly exempted iPhones and other tech assembled in China from new tariffs; an iPhone completely “Made in U.S.A,” costing $3,500 rather than $1,000, would mean far fewer American buying them, crippling a top American innovator.
It’s good to have China and other countries reduce trade barriers, knowing U.S. barriers are worse than many. Better still, call off the trade war and attack the $3.079 trillion federal regulatory burden—12% of GDP—to truly make America the go-to place to produce!
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Edward Hudgins, Ph.D., runs the Human Achievement Alliance. At Heritage in the 1980s he worked on free trade with Israel and with Canada, & at the Joint Economic Committee in the early ‘90s on North American free trade. [email protected]
