U.S. trade policy promotes economic growth through regulations and agreements that control imports and exports with other countries. From free trade agreements to bilateral investment treaties, learn how trade policy impacts the economy and your personal finances.

How US Trade Policy Impacts the Economy

Custom illustration showing the pros & cons of international trade. The illustration is divided in two with a semi driving on one side and on the other a far away train cutting through farmland. Pros: spurs economic growth, facilitates competitive advantages, and provides domestic companies experience in foreign markets. Cons: leads to job outsourcing and fewer dmoestic roles, causes other countries to lose agricultural base, and undercuts the prices of local farmers
International Trade: Pros, Cons, and Effect on the Economy
Frequently Asked Questions
  • What is trade policy?

    Trade policy refers to the agreements and regulations surrounding imports and exports between different countries. It is used to promote economic growth and competitiveness.

  • What are the main instruments of trade policy?

    The main instruments of trade policy in the U.S. are negotiating agreements, setting rules, and enforcing trade commitments and laws; supporting export financing and licensing, market research, and trade missions; regulating and adjusting laws on imports and exports; encouraging trade and growth with developing countries; and protection and promotion through investment treaties and agreements.

  • Who coordinates trade policy in the U.S.?

    The U.S. Trade Representative (USTR) coordinates and negotiates trade policy, but Congress is the arm that sets the U.S. trade policy objectives, laws, programs, and agreements, and oversees the USTR and other federal agencies involved in trade policy. The president is also allowed to negotiate trade agreements through the Trade Promotion Authority (TPA).

  • What is protectionism in trade policy?

    Trade protectionism is a stance that some countries adopt to protect their domestic industries from foreign competition. It may work in the short run to bolster domestic production and business, but in the long run, trade protectionism may make a country and its industries less competitive in international trade.

  • What is strategic trade policy?

    Strategic trade policy refers to agreements and/or treaties that put conditions on trade between countries. For example, this may happen when two exporting nations export goods exclusively to a third party country, or when two nations compete in each others’ markets. This implies that a strategic trade policy may focus only on trade that limits competition, leading to an oligopoly.

Key Terms

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