The free market advocate: Milton Friedman on trade, tariffs and economic freedom

Nobel laureate economist Milton Friedman speaks in New York on Oct. 8, 1968. (Meyer Liebowitz/The New York Times)

By Cristóbal S. Berry-Cabán

The economic policies of President Donald Trump mark a significant departure from decades of broadly bipartisan support for free trade. Chief among these policies is Trump’s aggressive use of tariffs.

One of the most important lenses through which to view these developments is that of Milton Friedman, a Nobel Prize-winning economist and one of the 20th century’s staunchest advocates of free-market capitalism. Friedman’s views on international trade and tariffs provide a critical contrast to Trump’s trade policies, revealing deep philosophical and practical divisions.

I first read Milton Friedman’s”Capitalism and Freedom” (1962) in 1973, as a student enrolled in Economics 232 at the Universidad del Sagrado Corazón. Recently, I came across a copy of the book and decided to reread it in light of today’s events. (At the time, we also read Marx’s “Communist Manifesto” [1848] and John Kenneth Galbraith’s “The Affluent Society” [1958], though neither is relevant here.)

Friedman would likely have opposed Trump’s tariff-heavy approach to trade. Friedman was a lifelong proponent of free markets and limited government intervention. In his view, voluntary exchange between individuals and nations always creates mutual benefit. He argued that trade deficits were not inherently bad, and that tariffs distorted the market by creating artificial advantages and disadvantages.

Friedman famously said, “The consumer is the ultimate boss. If he doesn’t buy it, it doesn’t get produced.” This consumer-centric view clashes sharply with Trump’s producer-focused rhetoric. While Trump aims to protect specific industries and jobs, Friedman believed that the government’s role was not to protect individual sectors but to create a framework where market forces could operate freely and efficiently.

To Friedman, tariffs were a form of taxation, levied not on foreign producers, but on domestic consumers. If an American buys a TV made in China and is forced to pay an extra tariff, that cost is passed on to them, not to China. He believed tariffs undermined the efficiency of markets, reduced competition, and lowered the standard of living by making goods and products more expensive to the consumer.

Trump frequently argues that America is being “ripped off.” He believes that trade deficits equate to economic loss and tariffs are a tool to redress these perceived imbalances. On “Liberation Day,” the Trump administration imposed tariffs on hundreds of billions of dollars’ worth of imports, with the stated goals of reviving American manufacturing, protecting national security, and punishing unfair trade practices like intellectual property theft and currency manipulation.

While these policies appear popular among certain segments of the electorate, particularly in manufacturing-heavy states, and hailed as a long-overdue response to globalization, they are also leading to retaliatory tariffs from other countries that will ultimately disrupt global supply chains and increase costs for American consumers and businesses.

Another critical area of divergence between Trump and Friedman lies in their understanding of trade deficits. Trump often frames trade deficits as evidence that the United States is losing the trade war. Friedman, on the other hand, argued that trade deficits are not inherently negative. They merely reflect that a country is buying more than it sells abroad, often because it is attracting foreign investment. He emphasized that dollars spent abroad eventually return in some form, through investment, savings, or other transactions.

In Friedman’s view, Trump’s focusing on the trade balance is a misunderstanding of economic dynamics. He likened it to an individual who buys more than they sell, which is perfectly normal in a market economy. What matters, Friedman says, is not the balance of trade but the freedom of individuals to choose the best products and services available to them, regardless of where they come from.

Trump’s tariff policies appear to be driven as much by political strategy as by economic rationale, aiming to appeal to voters, particularly in the Rust Belt, who felt marginalized by globalization and the collapse of domestic manufacturing. These measures signaled his commitment to protecting American workers and industries, even as many economists warned of potential long-term consequences, including higher consumer prices, supply chain disruptions, and retaliatory actions by trade partners.

This growing tension has culminated in the recent imposition of 50% tariffs on Indian goods, a decision the Trump administration has justified by pointing to India’s continued purchases of Russian oil despite U.S. efforts to isolate Moscow. Brazil has also come under fire, facing similar tariffs after Trump sharply criticized the prosecution of former president Jair Bolsonaro, labeling it a “witch hunt” and accusing the Brazilian government of threatening the rule of law and free speech. The administration cited both Bolsonaro’s legal troubles and Brazil’s regulatory stance toward U.S. tech firms as grounds for the new trade penalties.

These latest actions underscore the Trump administration’s willingness to use tariffs as a tool of geopolitical leverage, blurring the lines between economic policy and foreign diplomacy. Friedman would likely argue that economic policy should not be shaped by political concerns.

Thus, short-term disruptions and job losses, while painful, are part of the process of economic evolution and should be mitigated through better education and social safety nets, not through trade interference.

The contrast between Trump’s tariff policies and Friedman’s economic philosophy highlights the deep divide between populist politics and classical economic theory. Trump views tariffs as tools to protect American industries, punish trade partners, and correct perceived imbalances, an interventionist approach driven by political strategy as much as economic rationale. Friedman, by contrast, championed the self-regulating power of free markets and saw government interference, especially through tariffs, as both harmful and counterproductive. Where Trump seeks to undo what he sees as decades of unfair trade, Friedman would argue that tariffs are a misguided remedy that ultimately hurt consumers and distort markets. In Friedman’s view, the better path is to embrace free trade, limit government intervention, and let consumer choice — not political pressure — guide the economy.

Cristóbal S. Berry-Cabán is a retired epidemiologist who served at Womack Army Medical Center in Fort Bragg, North Carolina. He now resides in Southern Pines, N.C., with his two cats, Solo and Bisquit.