National Welfare Arguments Against Free Trade Activist trade policies can sometimes increase the welfare of the nation as a whole There are two theoretical arguments against the policy of free trade The terms of trade argument for a tariff The domestic market failure Copyright C 2003 Pearson Education, Inc Slide 9-10Copyright © 2003 Pearson Education, Inc. Slide 9-10 ▪ Activist trade policies can sometimes increase the welfare of the nation as a whole. ▪ There are two theoretical arguments against the policy of free trade: • The terms of trade argument for a tariff • The domestic market failure National Welfare Arguments Against Free Trade