Question

Which is an argument against free trade?

A) Allowing unlimited trade levels will help insure fair competition among all sides.
B) Fewer trade barriers will lead to increased trade, production, and revenues for all sides.
C) Removing import duties will give an unfair advantage to countries in which labor is cheap.
D) A "level playing field" for trade is best achieved by protecting US firms from unfair competition.

Answer 1

C is the correct answer.

Answer 2

The correct answer is C.

A justification for the establishment of import duties and other trade barriers is the need of protecting domestic products who cannot compete in prices with cheap imports from developing countries where, for example, labor market standards are less strict and they are able to pay lower wages to their employees.

Therefore, lower factor costs mean lower total production costs and the foreign industries can export their products to other countries at a much cheaper price than the one charged by domestic producers, attracting the majority of consumers and gaining a major portion of the market share.