The ideal of free trade is the macro economists pipe dream. The theory is that it does no good at all to prop up non-economic businesses with tariffs as they are doomed to fail against the onslaught of cheaper (higher volume) foreign goods etc... Except the theory is all hooey. Elegant theoretical gibberish. The only way foreign goods can be cheaper and of equal quality is through greater availability of power and raw materials, or through an atmosphere/environment conducive to production (as in longer agricultural seasons, better soil, or better markets and infrastructure.) If the other country is larger, their markets are larger, so goods will generally always be cheaper. If their labour pools is cheaper, ditto.
So in any natural advantage is it impossible to compete. In most areas where markets are larger all goods will be cheaper in the larger country. That means practically no goods can compete from the smaller country! It begins to get difficult when you attempt to even the score in trade referee rounds, as it is impossible to compare societies, their culture and their costs. If some goods cannot be produced cheaper in the smaller market, particularly with higher transport and energy costs, then the natural disadvantage dooms ALL production of goods! So the MUST be tariffs or NO ONE works at all in the smaller country!
Free trade is a crock. It was dreamed up by the US pundits to divest Canada of ownership its production means and make it a economically colonized country of serfs whose raw materials and businesses are totally owned by the US. It was started to get around FIRA and CIDA and to get at Canadian oil, water, timber and minerals.
If you truly model a large economy next to a small one you will quickly see that modest tariffs must exist to preserve home grown more expensive but reasobale production in the smaller country in order that people have J-O-B-S. Without that protection, there would be no domestically owned industry. If the larger country allows free access to its markets of the smaller country, then the smaller country can compete in volume items that can stand transport costs, as in high value processed raw materials and bulk items. If it won't allow access to markets of finished items then the smaller country must achieve efficiencies in harvesting raw materials and limited secondary processing and these items should not be too competitive or have a strong need) with the other country's sources (i.e. water power, oil, aluminum, iron ore pellets, and softwood.)
What the US has done is block secondary manufactured wood products, like furniture and plywood, and start up a fast growing low quality substitute wood that does not make good pulp and makes lousy timber. Then they cry about our overall efficiencies. This is designed to drive our loggers right out of business as they barely survive now. Already the largest land grant in Canadian history, the Algoma Railroad townships has been snapped up for forest products by a Georgia, US company.
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