What are the basic arguments in favor of free trade?
By insulating domestic producers from foreign competition protectionism discourages modernization and improvement. Domestic consumers are also forced to pay higher prices since the price of foreign imports that might bring down retail prices are artificially elevated by government intervention. Also, protectionism invites retaliation from other nations. A protectionist measure that benefits one domestic industry might trigger a retaliatory measure injuring a different, more vulnerable industry.
