Back by popular demand

So blame Xacto, she requested more econ so here it is.

We were chatting and she says, "yeah. ok so let me get this straight.
11:45 AM free trade is controversial b/c it limits blue collar jobs here in the us, but it helps big businesses it helps b/c it creates more markets for exporting goods?"

So a term you should know is "opportunity cost" )http://en.wikipedia.org/wiki/Opportunity_cost) But Opportunity cost essential means that if it takes me an hour to paint a house and you half an hour, and it takes me an hour to build a bike and you two, instead of each of us building our own bikes and painting our own houses; you should paint the houses and I should build the bikes. That way for the same amount of time, we can have more goods. Basically, we can have more goods by specialization.

So in economic terms, each country produces the goods that they can make the cheapest. So they grow corn in Missouri (I've driven through Missouri, believe me, there is A LOT of corn) and they grow sugar in the Barbados because the climates of each region are best suited to grow those particular crops. So imagine that to get a ton of corn from Missouri, it takes 4 man hours and 4 hours of tilling the fields. But if you want a ton of corn from the Barbados, because its not ideally suited for growing corn, it takes more man hours and more hours of tilling to get the same amount of corn. Well you can use less people to get the same amount of goods, you can make it cheaper and make more of it.

So essentially we want the world to operate like this. We dont want Missouri to have to grow corn, sugar, build cars, build computers, and build Christmas tree ornaments. We want them to concentrate on corn because they're the best at producing it and they can make the most for the cheapest.

So when there are tariffs, it encourages countries to be less efficient with their resources. Say China can make a stick of gum for a dollar and Missouri can make it for 2; but a tariff makes the Chinese gum cost 2.5 dollars, Americans will buy the American product and an American has a job but theres a cost. So the American consumer used to be able to buy gum for 1 dollar, now has to pay 2 meaning they have less money to spend elsewhere. The inefficient labor hours it took to make the gum could have been used to to make something America is actually good at producing.

So the key to preventing a situation where America is importing everything and not exporting enough is America needs to find more things its the best at producing. The best way to advance our advantage is improved the collective skills and education of our workforce and gain advantages in white collar industries because we already have the best network of institutions of higher educations and other countries can produce shoelaces more cheaply than Americans can.

So back to original question, companies and consumers should both like free trade. Consumers buy goods at the best possible world price, companies who are the best at producing goods like it because they get to compete on the open market without the government raising prices and perhaps making a product that was the best AND the cheapest more expensive than the local product (like American Automobiles.)