Certified Management Accountant 2025 – 400 Free Practice Questions to Pass the Exam

The adverse effect of international trade on the home country primarily manifests in the loss of jobs and tax revenues. As companies engage in international trade, they may outsource production to countries with lower labor costs, leading to job losses in the home country. This outsourcing can significantly impact local economies, resulting in a decline in employment rates in certain industries, particularly manufacturing, where jobs are more easily offshored.

Furthermore, the loss of jobs translates to reduced income levels for workers, which subsequently decreases consumer spending. This decline can diminish overall economic activity within the home country. Additionally, with fewer employed residents, the government faces a decrease in tax revenues, impacting public services and infrastructure funding.

In contrast, increased job opportunities, stability in the economic landscape, and enhanced competitive advantage are generally viewed as benefits of international trade. While there may be sectors that flourish due to open trade, the adverse effects are often felt more starkly in industries that struggle to compete with foreign imports, leading to negative consequences for workers and local economies.