America’s Tariff Love Affair Will Hurt the World’s Poorest

The World Bank’s measure of extreme poverty, at $2.15 a day, represents a level of deprivation that is rarely seen in the West. At this income, hunger or its shadow is an inescapable feature of life. Estimates suggest that over half the children born to poor families are undernourished. One could argue that even a small material improvement for a family living in such dire circumstances adds more to the sum of human welfare than big gains for the more fortunate.

One of humanity’s greatest achievements over the past half century has been its striking progress in reducing poverty. The share of the global population living under the poverty line fell to under 10 percent in 2021 from well over 40 percent in 1981, with much of the reduction coming from just two countries: China and India. The decline was so unexpectedly rapid that a United Nations goal of halving global poverty was achieved five years early. The improvement has also led to a more equitable distribution of global income, with developing countries accounting for a sharply rising share of world G.D.P.

International trade was indispensable to these gains. In the late 1970s and mid-1980s, China and India increasingly opened up their economies to the world. And many other countries prospered by using trade as a ladder of development, including the East Asian “Tigers” earlier in the 20th century.

All this is imperiled now that Western countries are turning increasingly protectionist. On both sides of the Atlantic, and both sides of the aisle in Congress, the idea has gained currency that trade with less affluent countries costs jobs and lowers wages. This kind of zero-sum thinking would sharply curtail development opportunities for countries with living standards far below those in the West.

Through its powerful link to economic growth, international trade has long been a scourge of global poverty. Developing countries that liberalized their trade regimes and integrated with the world economy — call them “globalizers” — have vastly outperformed the non-globalizers over the past four decades. The globalizers have also grown much faster than rich countries, allowing them to gradually reduce the still yawning per capita income gap with the West.

China and India have been among the world’s fastest-growing economies since the 1980s, together lifting an astonishing 1.1 billion people out of absolute poverty. Trade liberalization lay at the heart of both countries’ economic reforms, with the ratio of trade to G.D.P. soaring after liberalization. They reforms included tariff reductions, the elimination of licensing requirements and import monopolies, and greater exchange rate flexibility. Combined with a multitude of domestic policy changes, they unleashed the dynamism of local entrepreneurs. Businesses had much easier access to foreign ideas, capital and markets. At the same time, greater domestic competition, including competition from imports and from newly established subsidiaries of foreign companies, weeded out inefficient businesses and spurred brisk productivity growth.