Question

Free trade remains a very controversial pub;ic policy issue. Why do many economists think that free trade is economically beneficial? Why do many elected officials and activists oppose free trade. Use what you know about comparative advantage, opportunity costs, and labor markets

Answer 1

The debate about imposing tariffs and restricting freedom of trade internationally represents a revival of old concerns that remain largely alive because the advantages of free international trade are often intangible and difficult to see, whereas the advantages of protecting specific groups from foreign competition are often immediate and clear. This misconception fuels the popular belief that free trade is harmful to the US economy. This also tips the scales for special interests that seek protection from international competition. Consequently, the federal government is currently imposing thousands of tariffs, quotas and other trade barriers.

Free trade improves exposure to products of higher quality, at lower costs. Cheaper imports have eased inflationary pressures in the United States, especially from countries such as China and Mexico. Prices are held down by more than 2 percent for every 1 percent market share by imports from low-income countries such as China, leaving more revenue for Americans to spend on other goods.
Free trade increases productivity and boosts creativity. Over time, free trade combines with other market mechanisms to move jobs and capital to more beneficial uses, enabling business to flourish more efficiently. The consequence is higher salaries, spending in things like infrastructure and a more competitive economy

Free trade encourages equity. There is less room for cronyism when everyone follows the same rules-based scheme, or the potential of participating nations to bias trade advantages against favoured parties. In the absence of such a scheme, it is easier for larger and better-connected companies to gain unfair advantages such as tax and regulatory loopholes that protect them from competition.

In the 2016 presidential election this tactic of nominating anti-trade lawmakers backfired. While unions and progressive groups attempted to mobilize support for Hillary Clinton, a similar zero-sum approach was embraced by a small but significant number of working-class voters, particularly those in key Midwestern states that had been left behind by trade. They chose the Republican anti-trade candidate who vowed to bring back their jobs and reinvigorate manufacturing, rather than the Democratic nominee who had advocated free trade for much of her career and helped to negotiate the Trans Pacific Partnership agreement. Some also stayed home and refused to vote.