Non-Monetary Benefits of Open Trade
Since World War II, open trade has been a cornerstone of global economic growth. The non-monetary benefits include spreading democracy, human rights, and the internet, as well as the rise of organizations. For instance, dictatorships that dictators once ruled are now thriving democracies (Annelies et al., 2020). Global trade liberalization has helped spread democratic values worldwide and given people a voice in their government. The European Union and the North American Free Trade Agreement are regional organizations created by increased trade between member states. These organizations have helped promote peace and stability by encouraging economic cooperation between countries (Annelies et al., 2020).
In addition, they have also played a role in advancing democracy and human rights by setting standards for member countries to follow. Open has reduced conflicts between nations as countries agreed to settle their differences through negotiations rather than force. In 2004, for example, the United States and the European Union reached an agreement on a trade dispute that had been simmering for years (Annelies et al., 2020). The agreement allowed both sides to avoid a trade war that harmed their economies.
US Trade and Tariff Policies
The changes have had mixed results. The tariffs have helped revive the US steel and aluminum industries but have also increased consumer prices and led to retaliatory tariffs from other nations (Cavallo et al., 2021). Consequently, this has resulted in a trade war, hurting the United States and its trading partners. The Tariff policies have also led to the withdrawal of the United States from several international trade agreements, including the Trans-Pacific Partnership and the Paris Climate Agreement. These withdrawals have harmed the US economy by reducing market access for US exports and making it more difficult for the United States to negotiate future trade deals. Finally, the US trade policies have also created tension with its allies and damaged relationships that took years to build.
Annelies, V. C., Mark, V., Roel, B., & Sigrid, V. (2020). The degree of international trade and exchange rate exposure—Firm‐level evidence from two small open economies. International Journal of Finance & Economics.
Cavallo, A., Gopinath, G., Neiman, B., & Tang, J. (2021). Tariff pass-through at the border and store: Evidence from our trade policy. American Economic Review: Insights, 3(1), 19-34.
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Respond to the following in a minimum of 175 words:
Discuss non-monetary benefits open trade has contributed to the world since the end of WWII. Provide at least two examples. Why do you think these are important?
How have changes to US trade and tariff policies affected US trade with other nations? Consider recent (less than two years old) credible news sources to support your response.