Why the U.S. Shifted from Protectionism to Free Trade

Introduction: From Protectionism to Free Trade

The modern United States is a declared advocate of free trade. However, this approach was only implemented over the past five decades; prior to that, the U.S. economy was relatively enclosed and protectionist. This paper examines the reasons that determined this shift in approach to international trade.

It can be argued that the transformation commenced when the First World War ended. As the United States was not directly involved in the fighting, its economy continued to prosper through the 1910s. When the war ended, the United States became the creditor of the economies affected by the conflict. In 1929, Americans were confronted with the threats of the greatest economic crisis the country had faced to that point, and their subsequent involvement in the Second World War further deepened their financial troubles.

In light of these events, U.S. officials perceived consumerism as an appropriate means of achieving economic prosperity. To accomplish growth through consumerism, however, both domestic and foreign customers needed extended access to American and international products. Consequently, barriers to international trade were lifted, and the U.S. economy transitioned from an enclosed, protectionist system to one that supported and promoted free trade. This movement encouraged economic growth not only through consumerism, but also through the increased ability to benefit from the comparative advantages of various global regions — a concept originally advanced by economist David Ricardo in his theory of comparative advantage.

National Goals and the Drive for Open Trade

The initial openness to international trade centered on lifting barriers to the trade of finished goods. Over time, however, barriers were also removed on the circulation of capital, technologies, and even labor.

Stephen D. Krasner (1976) argues that the United States, like any other country, based its decision in favor of free trade on a desire to accomplish domestic goals. In State Power and the Structure of International Trade, Krasner also points out that a country will change its approach to international trade when it has both the power and the incentive to do so. He identifies four types of national goals that guided the United States in its shift toward free trade:

The United States aimed to achieve and maintain all four of these goals. As a state, the U.S. had already become an important international player, and the change from an enclosed economy to an open one would further increase its power — not only politically, but economically as well. Despite the importance of all four goals, the primary drivers appear to have been political power and economic prosperity.

External Pressures and Hegemonic Power

Timothy J. McKeown (1983), though primarily drawing on European examples, similarly argues that a state will play an influential role in international trade when it stands to gain from doing so and when it possesses sufficient power to modify its position. The United States demonstrated significant superiority over its neighbors and rivals throughout the twentieth century. In 1850, for instance, it accounted for only 8 percent of all international trade; by 1913, its share had grown to 11 percent, and it continued on an upward trajectory in the years that followed.

The conclusion drawn from McKeown's work aligns with Krasner's: the United States transitioned from a protectionist to an open trade economy in order to maximize its national objectives, and its success was made possible by its capacity to implement that change. Correlating these academic findings with the historical context outlined above, it can be said that the United States was eager to revive its economically challenged position and, with this objective in mind, made the transition from protectionism to free trade.

Conclusion

The United States' shift from protectionism to free trade was driven by a confluence of political ambition, economic necessity, social structural change, and the measurable gains that open markets deliver to consumers and producers alike. Drawing on Krasner's national goals framework, McKeown's hegemonic stability perspective, Rogowski's analysis of social structure and trade exposure, and Krol's empirical assessment of trade benefits, it is clear that no single cause explains the transition. Rather, it was the convergence of domestic imperatives, international power dynamics, and evolving societal demands that led the United States to become one of the world's foremost advocates of free trade.