Does everybody benefit from international trade? List some of the arguments for

Question

Does everybody benefit from international trade? List some of the arguments for free trade(absence of tariffs and quotas). List some of the arguments against free trade. Include in your discussion the effects on consumers, domestic sales, imports, domestic prices and international relations. Should we worry about the trade deficit? Should the U.S. government impose tariffs on imports from China given that China artifically deflates the value of the Chinese currency to increase their export sales?

Explanation / Answer

Buying and selling in overseas markets offers potential for businesses to develop and expand opportunities. Some of the key benefits are:

Arguments against free trade

a)Infant Industries Argument

If the developing countries have industries that are relatively new,then these industries will struggle against international competition.However,if they invested in the companies then in the future they may be able to gain comparative advantage

b)The senile industry argument

If the industries are decliing and inefficientthey may require large investment tomake them efficient again.

c) raise revenue for the govt

Import taxes can be used to raise money for the govt however this will only be a small amount of money.

Effect of free trade

consumers are benefitted from free trade as they will now get the goods in less price than when the free trade is not there.Domestic sales decreases from free trade as the foreign product shares the domestic consumers demand with local production.Import increses from free trade.Domestic price of goods decreases due to increase in competition given by foreign production.International relations improve from free trade as the goods are exchanged between nations.

Trade deficit may be a reason for concern as imports increases so trade deficit decreases.

yes tariff should be put on products imported from china.Because US also exports goods in China in ample amount and also it is also the local requirements of these goods which makes it necessary for import

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