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What are the potential risks associated with relying on international trade?

Jeane Laingmaid

Well, there are quite a few potential risks associated with relying on international trade. For one, it can make countries overly dependent on other nations for goods and services. This means that if something goes wrong with the trading relationship, the importing country could be left in a tricky situation.

Additionally, there's always the risk of trade wars and tit-for-tat tariffs. We've seen this recently between the US and China, and it's resulted in higher prices for American consumers. In fact, research shows that the US tariff increases on Chinese goods have cost the average household around $1,277 per year.

Another issue is that international trade can exacerbate inequality. Globalization has led to an increase in wealth for some, but it's also widened the income gap between rich and poor. In fact, the World Economic Forum found that between 1990 and 2015, the top 1% of earners captured twice as much of the world's income growth as the bottom 50%.

International trade can also have negative environmental impacts. Shipping goods across the world contributes significantly to carbon emissions. And it's not just climate change that's a concern; the disposal of packaging materials and the transportation of hazardous materials can all have detrimental effects on the environment.

Finally, there's the risk of job losses. As companies look to cut costs by outsourcing production to countries with cheaper labor, workers in higher-cost countries can find themselves unemployed. According to the Economic Policy Institute, the US alone lost around 3.2 million jobs between 2001 and 2013 due to trade with China.

So, there you have it - there are a lot of potential risks associated with relying on international trade. Of course, there are also significant benefits, but it's important for policymakers to carefully consider the consequences of increasing global interconnectedness.