Free trade and protectionism are distinct economic concepts. Free trade encourages imports with minimum tariffs and allows industries to relocate abroad or to make it hard for foreign firms to sell their goods internally and discourage the relocation of firms abroad. Free trade is associated with economic efficiency as countries seek to maximize their competitive advantage. However, the local citizens suffer job losses as cheaper imports are preferred for somewhat expensive local produce. Protectionism is also associated with various advantages and disadvantages. A primary advantage is that it encourages local production to grow a nation’s wealth. Hence, governments charge huge tariffs on imported goods to discourage foreign companies from competing with local industries. However, this doctrine overlooks the notion that countries cannot be self-sufficient and that local production should be occasionally supplemented through imports.
Indeed, policymakers noted that mercantilism had become counterproductive and questioned its authenticity in 1776. It is for this reason that the free trade policy was adopted. Despite the benefits associated with free trade such as cheaper imports, it also resulted in numerous costs, including job losses and negative impact on the people’s ways of life. Therefore, free trade should be abolished as it results in severe human costs, which surpass its advantages. It is also critical that governments adopt fair trade practices that allow nations to compete on their most competitive fronts.
The United States should address the challenge of less expensive manufacturing costs abroad by focusing on its strengths other than outsourcing all its production functions to third-world countries. Adam Smith argues that every country is characterized by unique strengths, which should be harnessed to grow its national wealth. Therefore, the United States should understand its aptitude and focus on its greatest strengths. The country can then purchase products with high manufacturing costs while maintaining the production of many other items to safeguard local jobs. This strategy safeguards against the loss of jobs and national wealth.
