What does free trade refer to?

Free trade refers to a government policy that allows goods to enter and exit a country without interference, meaning that there are no tariffs, quotas, or other trade barriers that inhibit the flow of goods between countries. This concept promotes international trade by enabling businesses to import and export freely, thus fostering competition, lowering prices, and providing consumers with a wider variety of goods.

This policy contrasts with other options that include restrictions or regulations. For instance, tariffs, which are taxes imposed on foreign goods, create additional costs for international trade, thereby hindering free trade principles. Similarly, regulations on domestic sales and restrictions on shipping are inherently limiting factors that impede the fluidity of trade that free trade aims to ensure. Understanding the fundamental principles of free trade highlights the importance of global commerce and the economic advantages that arise from minimal governmental intervention.