Free Trade vs. Protectionism: Exploring the Rationale Behind Trade Barriers

Abstract

International trade plays a crucial role in the global economy. Today, more than 25% of global output is exported goods. Among them, specialization is the core of international trade because countries could apply their comparative advantage to increase productivity and reach economies of scale. However, governments imposed many trade barriers like tariffs and quotas despite the potential inefficiency and waste. This article analyzes trade barriers and finds that international trade promotes competition, economics of scale, scientific and technological innovation, etc. However, in some cases, the government may choose to use some trade barriers temporarily to protect domestic products, increase government revenue, and enhance national defense How, if used for a long time, it will cause inefficiency and waste resources for industries and consumers. Therefore, the balance between free trade and trade barriers should be found and the trade off should be carefully evaluated In the global context, an open and fair competitive environment should be considered first to promote economic development and improve the quality of human life.