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If the chief justification for a tariff is to stimulate infant industries, it must be high enough to allow domestic manufactured goods to compete with imported goods in order to be successful.This theory, known as import substitution industrialization, is largely considered ineffective for currently developing nations.The great prosperity of the Netherlands after throwing off Spanish Imperial rule and pursuing a policy of free trade made the free trade/mercantilist dispute the most important question in economics for centuries.Free trade policies have battled with mercantilist, protectionist, isolationist, communist, populist, and other policies over the centuries.

In a 2006 survey of American economists (83 responders), "87.5% agree that the U. should eliminate remaining tariffs and other barriers to trade" and "90.1% disagree with the suggestion that the U. should restrict employers from outsourcing work to foreign countries." Quoting Harvard economics professor N.Under similar analysis, export tariffs, import quotas, and export quotas all yield nearly identical results.Sometimes consumers are better off and producers worse off, and sometimes consumers are worse off and producers are better off, but the imposition of trade restrictions causes a net loss to society because the losses from trade restrictions are larger than the gains from trade restrictions.There is a broad consensus among economists that protectionism has a negative effect on economic growth and economic welfare, while free trade and the reduction of trade barriers to trade has a positive effect on economic growth.Two simple ways to understand the proposed benefits of free trade are through David Ricardo's theory of comparative advantage and by analyzing the impact of a tariff or import quota.

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The magnitude of this societal loss is shown by the two pink triangles.

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