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By eliminating a report from the UN conference on trade and development, I became interesting to know that global trade reached altitude in 2024. Statistics were impressive: TR 33 trillion dollars, about 3.7 % of the year’s total. It took me back to my A -level economics classes nine years ago, where I first fought with the concepts of free trade and economic freedom.
Our teachers, who are a strict lawyer of globalization, explained the qualities of reducing taxes and accepting openness, which often challenges us to imagine a world without such obstacles. Nevertheless, in 2025, such optimistic views appear far away.
The global pieces and protectionism are on the rise, threatening to overturn decades of trade integration. So why are some countries returning to protection, and how will this trend affect consumers’ selection and prices?
Just a long time ago, the United States President Trump sent waves through the global economy, announcing the taxes on several countries exporting goods to several countries. At first glance, this is an attempt to relieve trade imbalance, but the implications of such move increase.
According to the Yale Budget Lab, this policy will bring US prices to their highest level since 1909. Regardless of diplomatic or trade relations, there is a 10 % tariff baseline for most countries. Many countries will face significant taxes on their exports to US markets. Beijing has responded with retaliation on US goods, which further pressures the complex relations between the world’s two largest economies.
Prices are taxed on imports. They have a difficult impact on consumers, which eventually pays more prices for goods. Historical evidence suggests that the tax burden is rarely on foreign producers. Instead, these are domestic shopkeepers and consumers who suffer the financial weight of such policies. Why do governments still rely on these economic obstacles?
The answer is in two old economic ideas: protection and trade system. Protection supporters pushed forward trade barriers to protect local industries from outside. Mercantilism, which dominated Western economic thinking from the 16th to 18th, saw global trade as a limited pie, where your benefit was my loss. This mentality gave birth to powerful trading companies like the East India Company, such as many countries – including the UK, France and Spain – as their colonies as areas, which are primarily available for their benefit.
The colonial areas had no choice but to sell their raw materials to their colonies and buy specially prepared goods from them.
However, the world has not been in this arrangement. From the early 1800s to the First World War, more countries opened their markets and reduced trade barriers. After interrupting everything in the war, trade in the 1920s once again lifted briefly before the great depression destroyed it. In the 1950s, a real turning point was marked.
Most countries began to realize that they were not in isolation when they were working together. The decades of growing trade contacts began, which we know today that the global market is made. The $ 33 trillion trade in 2024 shows how far we have come from the old “your benefit is my loss”.
Policy makers face complex tasks to balance the benefits of open market, which removes obstacles to the weak communities from international competition. Promotion is an ideal way forward for trade.
Of the economic ideas that created this evolution, the nucleusical theory stands to support its strong support for free trade. On the basis of this, David Recordo has a theory of comparative advantage, which is a concept of extraordinary importance in economic thinking.
The records argued that free trade was beneficial because it allowed different countries to master production, which requires less need for input factors. Its theory was focused on the costs of opportunities, and encourages countries to manufacture goods that they can trade more effectively for others.
Nuclear theoretists later introduced the concept of increasing backward costs, increasing the framework of records, which further strengthened the argument of specialty and open markets. These views helped the international trade relations evolve to co -operation, which created potential benefits for all participating economies.
The theory of records works beautifully in the open trading system. However, when some countries cannot tolerate a lot of imports, there are obstacles to the significant rates. They are forced to move the resources towards making products that they are not particularly good at producing. Over time, it just doesn’t hurt their users. It also affects their export industries, as they turn away from their skills.
The Haxcor Olin Theory helps to explain why it makes a difference. Generally, countries export resources that have plenty of them, and need import products that lack them. But throw trade obstacles and this effective system becomes a malfunction. Nations make less things less effectively, gradually lose productive benefits that special trade made the first place.
Despite these challenges, the benefits of specialization are forced. When countries focus on what they improve, the entire global economy improves performance. International trade encourages this specialization, and instructs resources where nations improve. In this way, consumers access more diverse products at better prices that cannot be provided to closed economies.
President Trump has argued that his new policy will strengthen US manufacturing and protect jobs. However, the protectionism shields domestic industries by making domestic industries more expensive than just local goods. As consumer priorities are developed, many traditional sectors face a competitiveness or market share. When workers have the skills of skills, transfer to new industries is unusual, which is politically appealing.
Both views offer unique benefits. Protection provides temporary asylum for weak industries. Free trade operates innovation and more shared prosperity. Evidence shows that open -term benefits for trade, expertise, economic growth and better quality of life provide long -term benefits. Policy makers face complex tasks to balance the benefits of open market, which removes obstacles in the weak communities from international competition. Considering historical data, openness to trade is an ideal way as it increases global wealth and ensures better use of resources. Tariff war is unnecessary and stop gap solutions are excellent.
The author, a UCL and a former student, operates in the policy field and is a co -founder of a community -based learning platform Hamsukhan.
