What is the impact of removing tariffs in a free trade agreement?

The impact of removing tariffs in a free trade agreement is best understood through the lens of how tariffs function in international trade. Tariffs are taxes imposed on imported goods, which increase their cost to consumers. When tariffs are removed through a free trade agreement, it eliminates these additional costs, leading to a more favorable pricing structure for consumers and businesses.

This removal fosters an environment where trade between countries can occur more seamlessly. Because goods can be imported and exported with fewer financial barriers, countries are encouraged to trade more with one another. This increased trade can lead to a wider variety of goods available to consumers and potentially lower prices due to increased competition among suppliers. Ultimately, the facilitation of trade encourages economic growth and enhances the interdependence of economies.

The other options highlight misunderstandings of the effects of tariffs. For example, increasing costs of goods and making them harder to obtain contradict the basic principle that removing tariffs generally promotes lower prices and easier access to products. Similarly, reducing the number of goods traded would not occur; rather, trade volumes typically increase as barriers are lifted. The assertion that it would make goods harder to obtain also disregards the positive impact of reduced impediments in trade. Hence, the correct choice reflects the overarching benefit of reduced tariffs, which