In this module we discuss the effects of international trade and import tariffs. First is shown the effects when a small country opens to international trade and begins to export a product. Second, when a small country opens to trade and begins to import a product. Both are shown to cause an improvement in overall national welfare and both are also shown to cause a redistribution of income, with some groups gaining from trade and others losing. The effects of an import tariff are also shown to cause a redistribution of income with the sum of the losses greater than the overall gains resulting in the reduction of economic efficiency. In brief, from the nations' perspective, all trade is good (both exports and imports) while import tariffs are not.

The Effects of International Trade - 55 minutes

Effects of an Import Tariff - 14 minutes