International trade policy refers to the rules and actions that governments use to regulate the flow of goods and services between their country and others.

Governments use several main policy instruments to manage trade:

• Tariffs: Taxes on imported products, which make them more expensive.
• Quotas: Limits on the specific amount of goods that can be imported.
• Subsidies: Financial support for local businesses to help them compete with foreign companies.
• Export incentives: Tax breaks or grants provided to domestic companies to help their sales abroad.
• Trade agreements: Formal deals between countries to lower trade barriers.
• Administrative barriers: Strict rules, such as safety or quality standards, that can slow down imports.

There are two main views on how trade should be managed:

Arguments for free trade focus on efficiency and consumer benefits, such as lower prices and more product choices. This is based on the idea that countries perform better when they specialize in what they produce most effectively.

Arguments for protectionism focus on protecting domestic industries, preserving jobs, and ensuring national security by limiting foreign competition.

However, these policies have risks. Protectionism can lead to higher prices for citizens, cause trade wars with other nations, and may be restricted by international organizations like the World Trade Organization (WTO).