Microeconomics › Section T · Globalization and protectionism › Topic T.5
The trade-offs of trade policy
Economists broadly agree that trade raises average living standards, and equally agree that it creates losers. The real policy question is not whether to trade but how to keep the gains while dealing honestly with the costs, and which tools do that best.
In this topic
- The average person does not exist
- Trade as a technology
- Disruption is everywhere
- The compensation principle
- Worked example: could the winners pay?
- Tools for adjustment
- Other goals and better tools
- Worked example: tariff or subsidy?
- The debate since 2025
- Common mistakes to avoid
- Key takeaways
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