Free trade and tariffs

In short: Free trade means trade between countries without major barriers. Tariffs are duties on imported goods and make imports more expensive. They protect domestic firms but make products more expensive for buyers.

In more detail: According to the theory of comparative advantage, countries benefit when they specialise in what they do relatively best.

In detail

• Advantages: More choice, lower prices, larger markets for firms.
• Disadvantages: Competitive pressure, job losses in some industries, dependencies.
• Tariffs: Protective tariffs, punitive tariffs; a trade war often harms both sides.
• Trade agreements: For example the EU single market (europaeische-union-geschichte-und-aufbau).
• WTO: The World Trade Organization sets rules and settles disputes.
• Parcels: Imports from third countries incur customs duty and import VAT.
• Sustainability: Supply chains and climate protection are increasingly part of trade rules.