In Defense of Freer Trade
The recent tariff measures promoted by President Trump (which can be presumed to be part of a temporary negotiation strategy and not his long-term goal) have highlighted the multiple regulations that many governments, including ours, have accumulated over time.
Regardless of whether the current tariffs are part of a negotiation tool, we can conclude that if applied permanently, these policies would be highly detrimental to the global and local economy by restricting free exchange and making goods and services more expensive.
The stated goal of these measures is to achieve a positive trade balance with each country, exporting more than is imported. In 2024, according to OEC-World, Uruguay had a trade deficit with the United States: we exported goods worth US$ 1.192 billion and imported US$ 1.213 billion.
Uruguayan Mercantilism: An Obstacle to Growth
Uruguay is not immune to mercantilism. Although our current trade balance is in deficit with the U.S., it doesn't necessarily reflect any a priori inconvenience, as the services section and trade with other countries are not considered here.
However, a limited productive structure can be evidenced, as expected, in a highly intervened economy with low per capita capital accumulation.
According to Central Bank data, between 2014 and 2019, private capital formation decreased by around 28% in relative terms compared to 2013.
In 2024, we mainly exported beef, meat by-products, cellulose, and wood, while we imported oil, diesel, medicines, and agricultural machinery. Although exports grew by 14.6% in the last five years.
Mercantilism, dominant between the 15th and 17th centuries, promoted the accumulation of wealth through trade surpluses, discouraging imports with tariffs and regulations.
Today, Uruguay partially keeps this mindset, with policies that protect specific sectors but limit innovation and competitiveness. As Adam Smith warned in The Wealth of Nations, these restrictions hinder economic growth and impoverish society by reducing consumer choices and making goods more expensive.
Article 50: A Constitutional Lock
A clear example of this mercantilist vision is Article 50 of the Uruguayan Constitution, introduced in 1967 under the influence of CEPAL's import substitution model.
