Free Trade
International trade between countries with no government-imposed restrictions or tariffs.
What is Free Trade?
Free trade is an economic policy under which governments impose no barriers — tariffs, quotas, subsidies, or regulations — on international commerce. Rooted in the comparative advantage principle, free trade theory holds that countries benefit most when each specializes in what it produces most efficiently and trades freely for everything else. In practice, free trade agreements (FTAs) like NAFTA/USMCA and WTO rules reduce (but rarely eliminate) barriers between signatories. Free trade increases consumer choice and lowers prices but can displace workers in industries that cannot compete with lower-cost foreign producers — a distributional tension that drives political debates.
Example
The North American Free Trade Agreement (NAFTA, 1994) eliminated most tariffs between the US, Canada, and Mexico. Total US–Mexico trade grew from roughly $80 billion in 1993 to over $670 billion by 2022, with supply chains deeply integrated across all three countries.
Source: US Trade Representative — USMCA