Q:

Why do most economists oppose trade restrictions?

A:

Quick Answer

Economists oppose trade restrictions because it creates inefficiency in the markets. It is best to have a global trade as opposed to a country closing itself from all kinds of foreign trade. Trade restrictions lock the country from new products, goods, skills available in other parts of the world.

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Full Answer

Trade restrictions involve government policies that restrict entrance of foreign products in the domestic market. This generally leads to overpricing of local products and inefficient use of local resources without any consideration to reduce the price. On the other hand, allowing goods from outside encourages competitive trade, and consequently efficient use of resources. Although this is likely to cause loss of jobs, it is not an impediment to growth and development. At the same time, free trade creates jobs in other industries. An economy that allows free trade, improves the welfare of people and the society at large. Free trade opens up foreign trade which benefits consumers from low-priced imports. Free trade opens up export market for Producers to benefit from a larger international market.

A country with trade restrictions risks being stagnant and outdated in terms of the goods and products traded locally. Trade restrictions are meant to protect local producers who are likely to suffer because of introduction of lower cost international competitors. However, free trade improves local productivity by necessitating efficient utilization of resources.

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