How Commerce Flourished After Columbus's Discovery of the New World

Columbus Day should be a humbling moment for the critics of Donald Trump’s trade policies.

The just-so story Trump’s critics and many of the people who like to call themselves “free-traders”  like to tell is that Europe’s discovery of the Americas and the subsequent boom of overseas trade required the removal of so-called trade barriers such as tariffs, state-granted trade monopolies, and international cooperation. But economic history tells a very different tale.

In a 2002 paper published in the prestigious Journal of Economic History titled “After Columbus: Explaining Europe’s Overseas Trade Boom, 1500–1800,” economic historians Kevin O’Rourke of Trinity College Dublin and Jeffrey Williamson of Harvard University found that commerce flourished in a global market that was dominated by economic hurdles and interventions as varied as import duties, excise taxes, export restrictions, wars, and piracy.

And these were not trivial. If trade barriers were falling during the period, you would expect to see a sustained narrowing of price gaps between continents. Instead, O’Rourke and Williamson found, the price gaps persisted. Indeed, they were so strong that they overwhelmed improvement in shipping technology.