There’s a greater chance of finding the Easter Bunny than Free Trade

I have some bad news for some of my economist colleagues: Free trade is a figment of their imagination. As a thought experiment, Ricardo’s idea that nations would all benefit if they all traded freely sounds like it would work in economic textbooks, but global free trade has never existed. Even 19th-century Britain, which came close to having unilateral free trade, gave up on free trade over a hundred and twenty years ago.

So, I despair when I listen to economists and commentators who are angry about Trump’s tariff increases but happily accept their own trade restrictions. Can any of them name a country that has free trade now?

The most embarrassing part about listening to UK economists pontificate about fictional free trade is that even with the US’s new additional tariffs of 10%, which are added to the US’s Most Favoured Nation tariffs, UK tariffs on many food and agricultural goods are still higher, as are EU food tariffs.

How Free is our trade policy

Even the poster child of free trade—Singapore—does not have completely free trade. Singapore has tariffs on beer of $16 per litre of alcohol and on ethyl alcohol with alcoholic strength <40% of $8 per litre of alcohol, and some pretty hefty excise duty rates on alcohol, tobacco, cars, motorcycles and fuels.[i] Countries with a trade agreement with Singapore, such as the US, can export beer there tariff-free, but for beer from other countries, the tariff works out at 70%. Ouch!

However, despite the Singapore-US trade agreement, according to the USTR report on Foreign Trade Barriers[ii], Singapore is keeping US banks and law firms (and presumably other foreign banks and law firms) out of its market. Apparently, the Monetary Authority of Singapore requires digital bank applicants to be: incorporated in Singapore, controlled by Singaporeans, and headquartered in Singapore; a majority of their employees must be Singapore citizens; and foreign entities must form a joint venture with a Singaporean company. So not exactly Free Trade. But in global terms, Singapore‘s trade barriers are fewer and lower than most other countries.

Averages camouflage high tariffs

Many of the same economists who believe the UK has free trade now, or at least freer than Trump’s America, have never examined the UK’s trade restrictions, and some, I suspect, have no idea where to find this information. Instead, they hide behind some very misleading average applied tariff calculations of only 3.8% and 9.2% on agricultural goods.

But averages can disguise a myriad of sins. For example the UK’s agricultural average is low because the UK has zero tariffs on goods it needs to import but can’t grow in the UK’s climate, such as soy and corn; lowish tariffs on goods for which there is no domestic demand, such as bird’s nests (6%) seal meat (6%) and donkey meat (4%). These low or zero tariffs bring down the UK average, so the casual observer doesn’t notice the massive tariffs on the ‘chosen’ goods. Such as the UK’s tariff rate of up to £1.93 per kg on butter, which works out at an applied average tariff of about 50%. Or the UK’s 12% plus £2.53/kg on fresh boneless beef and its 12% plus £2.54 per kg tariff on frozen boneless beef, these work out at an average applied tariff of about 55%. And this is despite the UK importing 63,425 tonnes of butter, 80,000 tonnes of frozen beef, and 160,000 tonnes of fresh beef in 2024. Almost all of this food came from Ireland, tariff-free, rather than from Ricardo’s theoretical ‘most efficient producer’. The UK keeps those pesky ‘most efficient producers' out of its market with high tariffs, small quotas, and lots and lots of non-tariff barriers.

Ridiculous UK tariffs

The UK even has tariffs of £16/hl on HS 22071000 ethanol[iii], even though the UK government has mandated that UK cars use E5 or E10 petrol, which is made by adding 5% or 10% ethanol to petrol. In 2023, this tariff added about 27% to the price of imported US ethanol, which is produced from corn. This tariff rate is even more ridiculous when you discover that the UK has very little arable land. Most UK farmland is ideal for livestock, but not so great for large tractors of the type used in Iowa and Illinois to produce corn. Both US states have more than twice as much arable land as the UK. They can easily grow corn to make ethanol without reducing the US food and feed supply, unlike the UK, which is using 2.2% of its limited agrarian land to grow bioenergy crops. The UK technically has 6.2 million hectares of arable land, but in 2024, we were only using 4.1 million hectares. What’s happening to UK farmland deserves another post, but for now, let's stay on fictional free trade.

To recap: The UK has mandated the use of ethanol in petrol, and it has very little arable land to produce ethanol. Yet it is still adding tariffs to ethanol imported from one of the world’s most efficient agricultural producers, the US. This is unbelievably stupid and a great example of the UK's non-free trade. Any UK economist upset about the US’s new tariffs should also be complaining about the UK’s existing ones. (Cue: tumbleweed.)

The tariff on ethanol is, unfortunately, not an isolated case. The UK has tariffs on food it can’t produce in its climate, such as oranges, mangos, almonds, roasted coffee, green tea, I could go on, and on. And these tariffs are designed to be protectionist – so guava juice, a fruit that the UK can’t grow, has a 10% tariff, cherry juice, a fruit the UK can produce but in small quantities, has a 16% tariff, while apple juice has a 30% tariff plus £17 per 100 kg. Apples grow in the UK, but not in large enough quantities to meet domestic demand. So, the UK imports apples from France tariff-free during the northern hemisphere’s growing season, but adds 8% tariffs on imported US apples.

Orange juice with a high Brix score has a 30% tariff, even though the UK can’t grow oranges. Importing whole oranges to make orange juice in the UK and then throwing away the majority of the transported weight of skin and pulp is nothing short of idiocy. But doing so will get a 10% tariff on the lower value orange, rather than a 30% tariff on the higher value juice. Talk about a perverse incentive.

Worse, UK tariffs are still designed to protect EU farmers even though the UK is no longer a member of the EU. The UK has tariffs of 14% on preserved tomatoes, £1.12 per kg on olive oil, £176 per tonne on rice, £79 per tonne on wheat (this is about 40%), and even 12% on refined palm oil. (For non-UK readers, the UK can’t grow olives, rice or palm oil, while its tomatoes are seasonal, and its wheat is predominantly green wheat used for animal feed.)

Coming to the wrong conclusions

And yet UK economists are complaining about Trump’s tariffs of 10%! Some economists have even suggested that the UK needs to ‘form a trade group with the EU’. I am not making this up[iv]. They appear to be unaware that we have a free trade agreement with the EU, but the EU still manages to make trade difficult for UK exporters. These economists also appear to be unaware that the UK inherited its most absurd tariffs from the EU. Just as the UK inherited its unscientific SPS regulations from the EU. More incredibly, these economists seem to believe that the EU has an interest in promoting free trade. It doesn’t! It’s a Customs Union.

The Thalos Foundation’s study of non-tariff trade barriers[v] found that France, the Netherlands and the Czech Republic lead the developed world in non-tariff barriers. All three are members of the EU, which is meant to have competency over their members' trade policy, but it would appear that some EU members are running their own additional protection rackets.

The most embarrassing part about listening to UK economists pontificate about fictional free trade is that even with the US’s new additional tariffs of 10%, which are added to the US’s Most Favoured Nation tariffs, UK tariffs on many food and agricultural goods are still higher. The average US applied tariff on UK exports of, say, Sugar and confectionery is now 23%, while the UK tariff on US imports is still 30%. The average US applied tariff on UK exports of Meat and edible meat offal is now 15%, while the UK’s average tariff on US imports is still 28%.

And I haven’t even mentioned UK quotas. The US and Canada share a WTO quota of 1000 tonnes of beef[vi]. The US exported almost a million tonnes of fresh and frozen beef last year[vii], so I am not surprised that they didn’t bother to use the UK’s very ungenerous WTO quota.

But still, UK economists pontificate about the benefits of free trade and the dangers of Trump’s new tariffs… I despair.

The UK’s recent tariff suspensions

And if any of these economists believe that the UK is committed to free trade after it announced that it will suspend tariffs for two years on 56 products from the end of April, they need to read the fine print. The tariff suspensions are specified at the HS 10-digit level, which means they only cover very particular products and, in some cases, even the product's packaging size. For example, they have suspended the tariff on crude coconut oil – coconuts don’t grow in the UK – but only for crude coconut oil packaged for commercial use. They suspended the 6% plus 20p per kg tariff on pasta, but only for pasta made without common wheat flour or eggs. (Should that even be called Pasta?) The UK generously suspended its 2% tariffs on pine nuts and its 2% tariffs on dried grapes, but neither is produced in the UK, so we really ought to wonder why we had these tariffs in the first place. Even if the UK could produce pine nuts or dried grapes, a 2% tariff isn’t high enough to protect local producers, and as they are relatively cheap commodities, it wouldn’t even raise very much revenue. The only tariff suspensions that might help UK consumers were on the six products in HS Chapter 20: Preparations of vegetables, fruits, nuts or other plants. But don’t get too excited, they are only suspending tariffs on six of the 450 products in this chapter, and although this chapter’s tariffs range from 10% to over 30%, only one of the six product had a 30% tariff; all of the rest had 14% or 16% tariffs.

Everyone must drop their trade protections, or no one will

Even if one country were to remove all of its trade barriers, if its trading partners don’t do this as well, then they would not have free trade. As for the idea that if you make your enemy your largest trading partner, then they will become your friend – well, I don’t even think Ricardo would have advised Regency Britain to become dependent on Napoleonic France for fuel, cannon balls and medicines. So, what was Germany thinking when it decided to close its nuclear power plants and rely instead on Russian gas and occasional wind power? Equally, what was the US thinking when it decided it could rely on China to supply it with everything from refined rare earths to pharmaceutical ingredients?

Back to the drawing board

In defence of Ricardo, I don’t imagine that he ever thought that countries would strangle their own industries with regulations, expensive renewable energy, high wages, and higher taxes and then add tariffs to imported goods from countries with no regulations, cheap coal-based energy, low wages, and lower taxes.

Free trade sounds like a great idea in theory, but unless Trump's tariffs force British, and European, and Japanese, and Korean, and Canadian, and Mexican, and Chinese, (I could go on), politicians to become more self-aware about their own trade barriers – global free trade will never get off the drawing board. And as to the chances of any of these countries implementing unilateral free trade,… I think the answer is zero. Unless, of course, we move Ed Miliband to the trade department. He is happily pursuing Net Zero without noticing that no other country is following him. But then again, maybe not. Being the only Net Zero zealot in the global village is destroying UK industry, although on the plus side, we didn’t have to worry too much about Trump’s 25% tariffs on steel.

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[i] Singapore Customs, List of Dutiable Goods, List of Dutiable Goods

[ii] 2025NTE.pdf

[iii] UK Australia Free Trade Agreement Annex 2B Part 2B-4 Schedule of Tariff Commitment of the United Kingdom

[iv] Tariff wars: What happens next? - UnHerd

[v] Trump thinks ‘cheaters’ are hurting us on trade, but here’s how the U.S. employs a number of sneaky ‘non-tariff barriers’ to repel foreign goods

[vi] UK tariff rate quotas 2025 - GOV.UK

[vii] Trade Map - List of products exported by United States of America