Many economists make international trade seem more complicated than it needs to be. Stephen Landsburg had a simple way of explaining it all.  

Landsburg’s version goes as follows:

“There are two technologies for producing automobiles in America. One is to manufacture them in Detroit, and the other is to grow them in Iowa.

Everybody knows about the first technology; let me tell you about the second. 

First, you plant seeds, which are the raw material from which automobiles are constructed. You wait a few months until wheat appears. Then you harvest the wheat, load it onto ships, and sail the ships … into the Pacific Ocean. After a few months, the ships reappear with Toyotas on them.  

International trade is nothing but a form of technology. The fact that there is a place called Japan, with people and factories, is quite irrelevant to Americans’ well-being. To analyze trade policies, we might as well assume that Japan is a giant machine with mysterious inner workings that convert wheat into cars. 

Any policy designed to favor the first American technology over the second is a policy designed to favor American auto producers in Detroit over American auto producers in Iowa. A tax or a ban on “imported” automobiles is a tax or a ban on Iowa-grown automobiles.  

If you protect Detroit carmakers from competition, then you must damage Iowa farmers, because Iowa farmers are the competition.” 

Trade patterns get more complicated with more countries. Iowa’s wheat might stop along the way, turn into car parts exported to Japan, and Japan’s cars then head back to America.  

America would then have a trade deficit with Japan but perhaps a surplus with wherever the wheat wound up – if wheat and cars were the only things being traded.  

An overall trade deficit doesn’t mean America’s losing. It means others want to invest in America. That’s winning! The money either buys exports or it buys assets — either way, the money comes back.  

President Reagan understood. His 1987 speech on the harms of protectionism was eloquent. The Chinese Embassy in Washington shared it on Twitter earlier this week. 

Trump’s tariffs are like pouring herbicide and soil sterilant on Iowa’s car crop. They wreck America’s best technology for building things – and make the world poorer, too.  

I wish Trump had read Stephen Landsburg.