Free trade increases the size of markets. Thus, as demand for U.S. products overseas increases, so does American production needed to meet this demand. This allows American firms to hire more workers, pay higher wages, and invest more money in research and development of new products. Trade barriers overseas affect U.S. firms in the same way shutting the doors to the California market would affect a firm in New York. Free trade expands an American company's market, and this in turn expands sales and provides increased capital for that company's future production needs.
Free trade appears to produce global economic prosperity.
While some policymakers may doubt the merits of free trade, the available evidence suggests that the wealthiest countries are those whose borders are the most open to trade, and that the poorest are those whose borders are least open to trade. The available data show, for example, that countries with lower average tariff rates generally are the richest, and countries with higher average tariff rates generally are poorer. Of course, tariffs are not the only forms of protectionism a country can use. A government may have a relatively low average tariff rate but still heavily protect its market. Thus, to demonstrate fully the connection between free trade and economic prosperity, it is necessary to analyze other forms of trade protection that go beyond tariffs and duties.