Free Trade vs Protectionism
Free Trade and Protectionism are related concepts in AP Economics that students often mix up. In short: free trade is free trade is international trade conducted without government barriers such as tariffs, quotas, or subsidies. Meanwhile, protectionism is protectionism is government policy that shields domestic industries from foreign competition using tariffs, quotas, and subsidies. Here is how they compare side by side.
Free trade is international trade conducted without government barriers such as tariffs, quotas, or subsidies.
It lets countries specialize according to comparative advantage, raising total output and consumer welfare. While it lowers prices and widens choice, it can hurt specific domestic industries. Agreements like USMCA promote it.
Protectionism is government policy that shields domestic industries from foreign competition using tariffs, quotas, and subsidies.
It can protect specific jobs and infant industries but raises prices, invites retaliation, and reduces the overall gains from trade. Economists generally favor free trade, which maximizes total welfare.
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