4.3.3—Free trade versus protection

There is no universal “best” trade policy. Evaluate free trade and protection by asking which outcome is being measured, who gains or loses, and over what time period.

Free trade can expand choice, specialization, productivity and growth, but workers and regions exposed to import competition may face adjustment costs. Protection may preserve capability or employment during a transition, but can raise prices, invite retaliation and weaken efficiency if it becomes permanent.

A government could combine a temporary infant-industry tariff with a published removal date and retraining support. The evaluation then tests whether productivity improves and whether the wider costs remain acceptable.

Do not treat an argument for one stakeholder as proof of higher welfare. State the criterion, evidence and conditions that would change the conclusion.