What is often the end result of legal trade obstacles?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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There are at least two important end results that can be seen when countries erect legal obstacles to trade.

First, legal trade obstacles typically lead to other legal trade obstacles. When one country erects trade barriers against another, there is typically pressure within the second country to retaliate.  This can lead to trade wars, the effects of which can spill over, causing less free trade as countries create more barriers.

Second, the creation of barriers to trade typically leads to lower standards of living within a country.  When a country creates trade barriers, it forces its people to buy domestic goods which are either of lower quality and/or higher price than the imports would have been.  By protecting various industries, countries allow those industries to evade competition from abroad, thus allowing them to sell their products for higher prices than they would have to if free competition were allowed.

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