Interna onal trade is not without costs. It often impacts the lives of millions who are on the receiving end of trade.
Basic courses in interna onal trade deals with the ques on of how trade impacts different sectors of the economy. It is known that trade impacts adversely the scare factor of produc on, but it impacts favorably the abundant factor of produc on. In the United States labor is the scare factor, so wages are generally higher compared to its trading partners. With interna onal trade labor loses in the US.
Cheaper imports make American products uncompe ve. Cheaper imports replace American made products, which increases domes c unemployment and suppresses wage. That is why labors in the United States dislikes interna onal trade and support Trump’s crusade against trade. In India, however, labor is an abundant factor. There is widespread unemployment in India without trade, and with trade Indian exports creates increased employment opportunity in India and increases wage.
Case in point is the Indian IT sector, which has grown leaps and bounds with interna onal trade. So, trade is welcomed by Indian labor, while American labor has nothing but sheer disdain for interna onal trade. Indian capitalist (capital is a scare factor in India) o en dislikes interna onal trade because it breaks their domes c monopoly, while American capitalist (capital is an abundant in the US) welcomes trade as it affords them addi onal market to invest their surplus capital.

This duality of trade, hur ng and helping at the same me, makes trade a complicated issue. Democra cally elected governments cannot afford to alienate a major por on of their electorates. Hence this everlas ng tussle between pro trade and an-trade forces within a country and its impact is now felt globally. In totality, Trade benefits consumers at the expense of domes c producers.

The beneficial impact of trade that is o en touted in the public domain stresses focusses exclusively on the benefits trade o en bestows on the consumer, but o en ignoring the mayhem it creates on domes c producers. To ensure universal acceptance of trade, we must design policy op ons to compensate the losers (the scare factors) by par ally taxing the benefits of winners (the abundant factors) in interna onal trade. This is much easier said then done. In this complicated geo-poli cal environment, with asymmetric bargaining powers winners have been successful in stalling a consensus that allows winners to win without losers losing their way of life. So, the tussle is expected to con nue and its poli cal impact is expected to be debated for a long me to come. So, buckle up and enjoy the ride.