Trade and Tensions

International disputes and tensions arise in situations where one nation is seeking its own economic betterment in ways that diminish the economic welfare of other nations. Prior to World War II, most nations deployed systems of tariffs and import quotas in unveiled attempts to protect their domestic in- dustries. Today, trading tensions are often generated by a range of government activities that limit imports or subsidize exports; yet the governments that impose these measures often rationalize them as policy measures that have no protectionist or other trading objective. The earlier trading model was a mer- cantilist one. Economic welfare was seen as a zero-sum game in which each nation bettered its position when it sold more than it purchased from abroad. Because all nations could not sell more than they purchased, some nations were necessarily winners and others were losers. Under the mercantilist view, the nation that obtained the greatest surplus of exports over imports was the greatest winner