Question

Which of the following is a valid argument against free trade?

	1.	free trade strengthens potential enemies of the U.S., such as China and Russia
	2.	the U.S. has a persistent trade deficit, in that over the years it consistently imports more than it exports
	3.	none of the other answers are valid arguments against free trade
	4.	U.S. jobs are being outsourced
	5.	capital movements and immigration are very damaging to the U.S. economy

Answer 1

Option 2 is the most valid statement out of the given options.

If U.S. is facing persistent trade deficit, restricting free trade would restrict imports and can help improve the deficits. It improves the current account. However, it should be noted that this solution is helpful in the short-run. In the long-run, if U.S. keeps its borders closed for free trade, importing countries (if big enough to influence-like China) might drop imports from U.S. and find the substitutes which would reduce exports by U.S. causing negative effects on the economy.

But for modeling purposes, U.S. is a big country, and all other countries can be modeled as small (except China) economies that can't effect the exports by U.S. so restricting free trade could help in reducing trade deficits.