Find information and resources for the research and study of international trade. The exchange of goods and services between countries is crucial to the U.S. economy and most people, whether they know it or not, are affected by it in some way. International trade is why American consumers can snack on bananas grown in Costa Rica, text on a smartphone by the South Korean brand Samsung, or buy an Audi car assembled in Germany. Conversely, international trade is also the reason Mexican consumers can talk on an Apple iPhone built in California, and why Canadian travelers can drive a Ford vehicle assembled near Detroit.
International trade benefits society in many ways. Commerce between nations exposes consumers to a much wider variety of goods and services. Moreover, importing certain commodities allows a nation to concentrate on the products it makes best, which is called a “comparative advantage.” International trade leads to greater competition and the sharing of technology and it often leads to an increase in jobs for both the importing and exporting nation.
However, international trade can also have negative consequences. Many economists argue that international trade puts undue pressure on a country’s natural resources. They also say that commerce between nations can lead to inefficiencies that put the economy of some developing countries at risk. Finally, international trade is overdependent on world events: an increase in the cost of labor in China means U.S. consumers pay more for Chinese products.
Nations can adopt either a free trade or protectionism policy when they deal with international trade. Free trade is the theory that normal market forces will, by themselves, protect and promote trade and economic growth. Protectionism holds that regulation of international trade is crucial to ensure that markets function properly. For example, when domestic manufacturers in a particular industry are at a disadvantage, a government could impose a protective tariff which makes foreign products more expensive and acts as a safeguard to domestic companies.
The COVID-19 pandemic has put a strain on cross-border trade, but the World Trade Organization asserts that world merchandise trade is expected to increase as the demand for products returns.