Trade stimulates long term economic growth by supporting additional money flowing through the economy. The key to seeing where this gain is realized is in the fact that someone from country A buys a product from country C. Country C produces that product for $1 and in country A it would cost $5. By buying the product from country C the person in country A has the benefit of having more money to spend to buy more products which in turn stimulates additional economic output in both country A and B. As someone spends money in either country that economic revenue trickles down through the economy providing additional money throughout the economy for everyone. If a country only traded with itself then it could never realize the potential of foreign buyers or foreign investment. Take for example Apple, if they only sold products in the US they would be a much smaller company as they have more sales internationally than in the US.
In most cases exports will create more jobs as there is additional revenue coming in from outside the country that wouldn’t exist. However, the reverse is also true in that importing goods provides and frees additional money for investment and additional spending. Overall both should be viewed as favorable. The detriment to import and exports is more recognizable in the form of surpluses and deficits. Exporting goods in most cases also provides the bigger benefit as the country producing the product has a competitive price advantage that ensures future revenue from additional foreign buying.
A trade surplus contributes more to economic growth as it ensures there is more product flowing of the country bringing in additional revenue and investment capital whereas a significant deficit of trade results in more money flowing out. A good example is oil as we import much more than we export. Because of that we take money out of the US economy and put it into the economy of other countries like Saudi Arabia. While this does provide some residual revenue for Saudis buying American products there are jobs that are being fulfilled internationally that could be paying for jobs domestically. Again, price of the product and the ability to provide a particular product or service also plays a role.
Imposing trade restrictions on goods and services in most cases is done to protect domestic producers of products. If the market was completely open then everyone would buy products from where they were produced the cheapest. An example would be a country that imposes restrictions on US Beef in an attempt to protect cattle farmers in their country from being undersold. In places where there is little land beef cost a premium and if beef produced in that country were sold alongside US beef it would be much more expensive in comparison. There are pros in terms of protecting domestic producers but there are also many cons as relinquishing to the lower cost producer frees additional funds to be invested or spent elsewhere buying products that do have a competitive advantage in the domestic market.
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