The auto mechanic can devote her time to either fixing cars or growing food. However, compared to the farmer, the auto mechanic gives up the least amount of food grown if she fixes cars. Thus, the auto mechanic has a comparative advantage in auto repairs. Economic efficiency is reached because the world is producing more output than it can if there was no trade. The Costs of Trade With trade, there are both winners and losers.
Consumers gain, because they pay lower prices and have a greater selection of goods.
Workers and firms in the exporting industries gain because they can sell their goods overseas. However, workers and firms in the import-competing industries will lose with trade. Firms have to charge a lower price, and thus receive lower profits, when imports compete with their goods. Likewise, domestic workers in those industries are often asked to cut wages or may lose their jobs altogether. The losers from free trade tend to be more vocal than the winners.