Question

Who gains and who loses from trade?

Short answer

Winners - consumers who get products are lower prices, producers who earn higher profits

Losers - producers who earn lower profits

Step-by-step solution

Step 1. Introduction 

International trade refers to the exchange of goods, services, and resources across international borders among different countries.

Step 2. Explanation

Trade is generally beneficial for all participants as the countries can benefit from their specialization and comparative advantage. Consumers benefit from a wide variety of choices and producers benefit from higher profits.

But with freely open trade some industries that are not mature enough to handle foreign competition might get hurt. Similarly, not all products are good for consumers.

Those consumers who are able to purchase foreign products at lower prices are the winners. Those producers who are able to get higher prices for their products in the international market are winners. Those producers who face lower prices and lower profits because of competition are losers.