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What Is Free Trade?

Should the government control trade, or stay out of it?

Free trade happens when buyers and sellers from different countries trade with each other without either government getting involved.

Isolationists want less trade with other countries – or none at all. Protectionists want to help the people making things in their own countries by controlling trade. Both isolationists and protectionists use government power to control trade with other countries, and that’s called interventionism.

Both isolationists and protectionists use some of the same tools. Tariffs are taxes on things brought into the country. Quotas are limits on how much of something can be brought in. A subsidy is money given by the government – which is money that was collected from the people in taxes – to help people who make things in the country.

Free trade is the opposite of both protectionism and isolationism, and it gets rid of things like tariffs and quotas.

Pros

Usually, governments have tariffs to protect local companies from having to compete with companies from other countries. These businesses can grow and hire more people, which is good for those people.

Since tariffs are a type of tax, governments get money when people buy things that have tariffs on them.

Cons

There are some bad effects of tariffs though. When things have tariffs on them, it costs companies more money to buy those things from other countries.

The main problem that comes after tariffs is a trade dispute. As one country puts tariffs on another, the other country then applies tariffs too, which makes the prices go higher. Also, a country could bring in fewer things from other places, and that would hurt businesses that have to send their products to other countries.

Free Trade or Protectionism

Many people feel the government shouldn’t get involved in trade. They believe people from anywhere should be able to trade with other people from anywhere else without the government getting in the way. But many people argue that free trade is hurting America and that we need tariffs to protect us.

Are tariffs and other protectionist policies good for the United States? You decide.

Andrew Moran

Economics Correspondent at LibertyNation.com and LNGenZ.com. Andrew has written extensively on economics, business, and political subjects for the last decade. He also writes about economics at Economic Collapse News and commodities at EarnForex.com. He is the author of “The War on Cash.” You can learn more at AndrewMoran.net.

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