In the US, national security has been cited by proponents of protectionism for a wide variety of products, ranging from computer chips to automobiles to ship building. But when it comes to foreign countries, our protectionists often have a blind spot. They cannot even imagine that any other country might also have valid national security concerns.
“Everyone has their reasons” is a famous line from the classic French film Rules of the Game. I was reminded of this line when I read a Bloomberg article about Swiss trade policy. Switzerland eliminated all tariffs on manufactured goods, but continues to protect its agricultural industry:
Switzerland’s bid for a US trade deal risks sparking a showdown with one political force at least as feisty as President Donald Trump: its own farmers.
A country whose lush Alpine pastures, cowbells and cheese underpin the national identity, and whose agricultural lobby wields outsized influence to match, is in danger of a tough reckoning over what that’s worth when economic prosperity is at stake.
Countries such as Japan and Switzerland do not have a comparative advantage in agriculture. Nonetheless, they often protect their farmers for various reasons, including “national security” considerations. I presume the Swiss were glad to have had an intact farm sector during WWII, when they could not rely on food imports from Germany.
At an international level, the political influence of farmers is inversely related to their share of the population, which is a problem for many theories of politics. In poor countries, farmers are numerous but politically weak. In almost all developed economies, farmers are a small minority. But they are viewed as a sympathetic lobby, even by city dwellers:
Acceptance of the current design of the domestic food market is widespread, despite its burden on consumers, fostered by a national belief in self-reliance. But bigger economic interests may prevail when set against agriculture, which represents a small fraction of gross domestic product.
The voice of farmers is often amplified in advanced economies, as seen with recent tractor protests from London to Paris and Brussels. In Switzerland, their influence pervades the political system.
Long-time readers know that Switzerland has my favorite political system. The Bloomberg article mentions one more advantage of direct democracy:
“Don’t underestimate Swiss diplomacy,” he said. “Whatever deal the Swiss may strike, it would probably have to be accepted by parliament, possibly even by referendum. That could strengthen Swiss negotiators because they can honestly say: Look, we won’t be able to get this through with our people.”
READER COMMENTS
nobody.really
Jun 2 2025 at 3:29am
I fear I’m missing the point. Why compare foreign susidies for agriculture to US protectionism for defense? Why not just compare foreign subsidies for agriculture to US subsidies for agriculture? That would seem to be a more apples-to-apples comparision–literally.
Scott Sumner
Jun 3 2025 at 12:56am
“Why compare foreign subsidies for agriculture to US protectionism for defense?”
Because both are defended on national security grounds.
TMC
Jun 2 2025 at 10:51am
This is a good point, and where I think free trade theory fails. Free trade optimizes for efficiency only when the system needs both efficiency and robustness. We need to be able to ensure there is some supply in times of need, whether the issue is war or natural disaster. A combination of efficiency and robustness could be just enough tariff or regulation to spread production of a needed good around the globe so it’s not concentrated in one country or region.
Scott Sumner
Jun 3 2025 at 12:55am
It may be an argument for Swiss tariffs, but certainly not for US tariffs.
TMC
Jun 3 2025 at 3:03pm
I mean goods in general, not food. What if China is our only supplier for network gear, or transformers? If we have a tariff that could move at least some of the production to South America we would have a more robust supply chain.
Jose Pablo
Jun 4 2025 at 9:54am
This idea of being “more robust” exists only in your imagination; it’s a feature of your mental model, not something grounded in observable reality. It would be far more enlightening if you could point to real-world examples instead.
Before 2014, Russia was Ukraine’s largest trading partner, accounting for about a third of its total imports. By the eve of the 2022 war, China had become Ukraine’s top trading partner, with $10.6 billion in imports, followed, remarkably, by Russia itself, still in second place with $6 billion, even after eight years of open conflict.
And yet, I haven’t seen a single credible reference suggesting that this so-called “trade dependence” on Russia or its allies, has in any way crippled Ukraine’s ability to defend itself. On the contrary, Ukraine’s defense has been, and continues to be, despite multiple betrayals, nothing short of extraordinary.
Facts matter more than political fear-mongering serving nationalist preconceptions.
TMC
Jun 4 2025 at 11:23am
Businesses have been doing this for centuries. There are lenders who won’t lend to you if you don’t have plans for this. Whole programs in IT are set up for exactly this.
Jose Pablo
Jun 4 2025 at 6:57pm
Indeed
Businesses don’t need the government to centrally engineer robustness.
Jose Pablo
Jun 3 2025 at 8:15pm
You’re assuming that the government can engineer “robustness”, a rather unfounded assumption, given its track record.
You’re also assuming that private agents care only about “efficiency.” In reality, they value resilience too, just based on a far better-informed cost-benefit analysis.
Take the Jones Act, for example. Its goal was to ensure a robust domestic shipbuilding industry, ostensibly to support national security in wartime. The actual result? The near-total destruction of American commercial shipbuilding.
At the start of World War II, the U.S. shipbuilding capacity lagged well behind that of the major European powers and Japan. Then, to make matters worse, the Pacific fleet was severely crippled at Pearl Harbor.
And yet, we prevailed. U.S. shipbuilding output surged from just 1.5 million gross tons in the prewar years (1933–1939) to over 40 million tons during the war, a scale-up unmatched in history.
The lesson, I’d say, is this: when it comes to “national security,” it’s better to cross the river when you get to it than to have the government wasting time and resources trying, and failing, to plan robustness into existence.
Governments only work, almost well, when under serious pressure.
Scott H.
Jun 2 2025 at 11:18am
Well, during a feared food shortage of 2007-2008, a large number of politicians world-wide immediately sought legislation to make export of their nations’ staple foods illegal. I think the same thing also happened during COVID. Is the ability to eat a national security issue?
Alex
Jun 2 2025 at 1:25pm
I’d love to hear more from you on Switzerland. Why are they so successful?
They seem to fit into your category of “small country surrounded by larger more regulated countries”, so in a sense they have it kind of easy.
Even the success of localism seems attributable to their size. Most governance is done at the canton level, and with ~8 million people across 26 cantons, it would take over 1000 cantons to govern 350 million people at the same density, which doesn’t seem very manageable.
I’m not convinced direct democracy is an example we can really learn from either. It doesn’t seem to to have done much good in California.
With decades of chronically low inflation, their monetary policy hardly seems like the kind you would endorse. Although it’s less clear to me size is doing them any favours here (though you admittedly have made the point monetary policy gets simpler the bigger and more diversified the country gets).
Scott Sumner
Jun 3 2025 at 12:58am
I attribute Switzerland’s success to their very extreme level of democracy. Voters are smarter than leaders, which is why the Swiss avoided both world wars, socialist economic policies, fascist politics, etc.