Why Trade is Good – Economist

ECONOMISTS are usually accused of three sins: an inability to agree among themselves; stating the obvious; and giving bad advice. In the field of international trade, they would be right to plead not guilty to all three. If there is one proposition with which virtually all economists agree, it is that free trade is almost always better than protection. Yet the underlying theory is not readily understood by non-economists. And the advice that follows from it-protection does not pay-is seldom wrong.

From: Economist 1998

The basic rationale behind free trade is that it can be beneficial to all countries and increase economic welfare. The law of comparative advantage also says that if other countries impose tarriffs on your exports. Your best response is still to have no tariffs on imports. This may sound counter intuitive, but, the argument is that abolishing tariffs will lead to an increase in economic welfare.

Most of the Benefits of Free Trade are here. However, I need to add a diagram showing trade creation and the benefits resulting from removing tariff’s.

However, although the Economist comes out strongly in favour of free trade, not all economists do. There are cases when tariffs might be justified in improving economic development in developing countries.

See arguments against free trade