In simple words can some one explain to me the negative effects of free trade?

Question

In simple words can some one explain to me the negative effects of free trade?

Answer 1

Free trade can lead to it being cheaper to import goods than to produce locally. This can lead to local manufacturing business closing, causing unemployment. When the factory closes the lunch bar next door to the factory has no customers so it it turn closes causing more unemployment. Because the factory has closed the people who supply them with raw materials have no business any more, so there's some more unemployment. .

All this unemployment leads to a huge recession.

There are also plenty of positive effects but you didn't ask for them

Thats what I remember from school. I'm sure an economics text book will explain it better.

Answer 2

free trade between economies is a measure implemented for increase economic growth in both countries. The problem is the net result is economic growing but usually some economic sector broke because these are overpass by the rivals of the partner-economy. The result is more wealth for majority but ruin for selected groups of society. Some governments design tools to give temporal adds for those companies that broke and its employees, but this increase the cost of the measure or the governments does not have the efficiency or capacity to give the add correctly.

Another problem is created when the free trade agreement is signed between one big economy and a little economy, the result is economic growth in big country and an economic down in the little economy...