Free Trade: Selling Shoes In The United States

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Free Trade is the unrestricted purchase and sale of goods and services between countries without the imposition of constraints such as tariffs, duties and quotas. This policy would allow many domestic consumers to purchase goods abroad freely as they can buy goods domestically. Protectionism, on the other hand, is government action or policies that restrict or restrain international trade with tariffs, quotas, and subsidies. The most powerful weapon protectionism has is a tariff, which imposes a tax on imported goods and services. However, protectionism is a policy favored by those in politics and the people go unnoticed about how these changes affect them. This hurts both economies as consumers are forced to pay higher prices and other countries would lose potential sales due to a decrease in demand.
When we trade freely, we would see domestic producers selling shoes in the U.S. at $65. A consumer looks abroad and wants to buy shoes at the world price of $20, which is much lower.
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This will then discourage those who consume imports from overseas to buying domestically, which government believes will associate with job growth. Therefore, what this tariff does is it raises the world price by the amount of the tariff or tax. With a new equilibrium containing the new price, we would see changes in quantity demand and supplied. The tariff raised for example the world price of shoes from $20 to $65. The outcome is a decline in quantity demanded as price increased and the domestic supply increased. Looking at free trade before the tax and after shows a decline in imports and the reason is nobody wants to pay the higher price. This tax is not shown as a tax to consumers instead it is shown as a price. The tax made on the goods is given to the government in the form of
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