Oren Cass argues the idea of comparative advantage driving trade is outdated. I agree to a certain extent, but he doesn’t explain why. I’d say intra-industry trade (IIT) – a staple of academic research since the 1980s – is one reason, but that does not provide justification for protection. In fact, his ignorance of IIT suggests his case for protectionism is ill-founded.How much intra-industry trade is there? Some recent estimates from Czarny, Elżbieta & Folfas, Pawel & Szarek-Piaskowska, Aleksandra. (2024). Intra-industry trade: a portrait of global patterns during 2000-2022.
Source: Czarny et al. (2024).The US share has gone down a bit since 2018, perhaps due to export controls (although that’s conjecture on my part). Even then, IIT accounts for over a quarter of total US trade.See also Richard Baldwin‘s recounting of IIT over time.More By This Author:When Econ 101 Isn’t Enough: Oren Cass On TradeSentiment, Confidence, And Expectations: The Latter Is Down Alternative Business Cycle Indicators
