Trade Talks (Free Trade Adv):

1. Increased Economic Growth: NAFTA increased US growth by 0.5%. Source: US Trade

Representative Office
2. Lower Govt Subsidies: As subsidies allocated to local businesses are cut or entirely removed,
these funds can be used elsewhere
3. Foreign Direct Investment: Investors come in. leads to additional capital which boosts local
industries.
4. Expertise: Global companies have more expertise than local companies. When multinationals
partner with domestic firms, they train them as well.
5. Technology Transfer: Local companies also receive access to the latest technologies from their
multinational partners. As local economies grow, so do job opportunities

Disadvantages:

1. Job Outsourcing: When tariffs on imports are reduced, companies can set up in foreign
countries as well with low costs. This can result in job loss in the home country. NAFTA led to a
lot of jobs transferred to Mexico
2. Theft of Intellectual Property: Developing countries don’t have laws to protect patents etc so
corporations often have their ideas stolen and then they have to compete with lower priced
product. One of the biggest US demand in the recent Trade war.
3. Poor Worker Conditions
4. Reduced Tax Revenue from Tarriffs

Trade Wars Adv:

1. Job Creation and Higher wages at Home country.

2. New Industries can be guarded from competition in their formative phases which can help them
grow
3. Technology Theft can be stopped
4. Revenue from Tarriffs goes up and this also helps to rein in national deficits
5. Can bring people together and create a sense of patriotism

Trade Wars Disadv:

1. Only advantageous if Trade Wars do not result in retaliatory response. Jobs that rely on Exports
can be lost
2. Limit customer choice for products and services
3. Can lead to inefficiencies in Domestic Industries because of less foreign competition which will
hurt profits. Quality and Innovation will decline over time
4. Historically Trade Wars have led to disastrous events. Smoot Hawley Act of 1930 (which
increased 900 Tariffs by 48%. It increased Food Prices and forced Global Trade down by 65%)
worsened Great Depression and led to WW2