Consumers and the Sources of US Trade Openness

Abstract

AbstractThis essay reviews US trade flows and trade policy from the perspective of consumers. Trade policy shapes the prices and the availability of products sold in the US to, ultimately, voters. Understanding the role of consumers in explaining US trade policy may therefore offer lessons for our understanding of politics beyond trade. International trade has created substantial gains for consumers, both by lowering domestic prices and by increasing access to a wider variety of products. Yet, US trade policy does not appear to reflect consumer interests: tariffs are higher for products with higher consumption shares. This finding is inconsistent with the narrative that open trade is a response to consumer interests, and it is not explained by standard collective action arguments either. Instead, the political influence of pro-trade firms emerges as a driving force of US trade openness. The essay discusses the implications for our understanding of the political and institutional sources of trade openness. If special interest politics explains the opening of trade, it reverses the traditional interpretation of trade openness as an indication of the absence of special interest politics.