The future of free trade

October 19, 2020

The United States was never truly fond of free trade agreements (FTAs). Since 1984, the U.S. has signed FTAs with only 20 countries, the most significant of which was the North American Free Trade Agreement (NAFTA), recently replaced with the United States-Mexico-Canada Agreement (USMCA). In comparison, the European Union has the world’s largest network of preferential trade agreements, having such pacts in force with 77 countries.

At the same time, for decades, the U.S. has been one of the most open economies in terms of trade, applying import tariffs that are among the lowest in the world. According to the World Trade Organization (WTO), its average applied import tariff in 2019 was 3.3 percent, compared to the EU’s 5.1 percent and China’s 7.6 percent. Even considering the recent wave of trade protectionism, with the imposition of higher tariffs on goods imported from its major trading partners, the U.S. average import tariff remains low.