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Disadvantages of International Trade

(i) Unrestricted trade may harm countries whose industries are still at infant stages. This stifles the development of “infant industries”.

(ii) It may also result in dumping of goods in some countries if not controlled.

(iii) If goods are allowed to flow across international boundaries, it means that every good needed in a country could be imported without restriction. The result of this will be the adverse balance of payment, especially when exports are less than imports.

(iv) Harmful goods may find their ways into the countries involved in international trade. Such goods include alcohol, hard drugs, arms, cocaine, etc.

(v) Excessive specialisation leads to too much over-dependence, which is dangerous in time of crisis between countries. For example, the USA placed an embargo on the importation of major goods from France as a result of its refusal to support the war against Iraq.

 

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