Free Trade Case Study

Is Free-trade killing the U.S industries?

As Trump is allegedly trying to force a high-percentage tarrif on the Chinese imports, and Bernie Sanders to oppose the former trade agreements with the Asia-Pacifics, international trade has became one of the most heated topics on the presidential political debate. Everything has its own good and bad, free trade is no exception.

On the brightside, in a perfectly competitive market, free trade maximizes economic efficiency, promotes economic welwares of both consumers and suppliers. While on the other hand, a country with a relatively cheap labor force, for example Trump’s favorite— Mexico, could substantially “steal” jobs from a coutry with a relatively higher cost of production.

Now before
On the other hand, when the world price is above the domestic price, the consumer surplus decreases by the amount of B while the producer surplus increases by the amount of B and D. Of course, when it comes down to the individuals, there are both winners and losers, but often times it’s the gain of the winners outweighing the loss of the losers. The conclusion so far is based on the standard analysis of international trade. Further more, the case for free trade can be made even stronger as the following. There are other economic benefits of trade other than those mentioned in the graph analysis.: Goods from different regions are not the same. Chinese food is not the same as Panda Express. Free trade allows consumers a greater variety of goods . Secondly, some goods can only be produced at lower cost if they are produced in large scale—a phenomenon called ecnonomics of scale. A single company in a small
For example, that a computer industry in China is immature that it cannot compete with the same industries from other countries in foregin markts. And let’s suppose that the industry will eventually earn a considerable amount of profit when it grows out. In such case, the buisness owners are and should be willing to endure the short-term losses for the long run profit. Thus protections are not even neccessary. As a matter of fact, most companies nowadays—such as Facebook—were operating under deficit with hopes of growing gains in the future. And most of them have succedded without any protection from