Source: Bet On It
by Bryan Caplan
“Anyone who wants to understand international trade should care about Luxembourg. When you analyze the effect of international trade on a large economy, it’s easy to get distracted by purely domestic factors. Even if Trump’s tariffs all go through, the U.S. will retain most of its great economic strengths, like the tech sector, a long history of entrepreneurship, relatively low labor regulation, and legal fracking. As a result of this continued vitality, American protectionists will avoid crushing ridicule when they loudly claim that their tariffs ‘worked.’ When you analyze the effect of international trade on a country like Luxembourg, in contrast, domestic factors will not distract you. Nothing in Luxembourg matters nearly as much as the fact that Luxembourg without trade is nothing.” (06/23/25)