Trade theory helps address many pressing issues:

1. Why do countries trade with each other and what determines what is being traded?
2. Across countries: do all countries gain from trading or does trade perpetuate global inequalities?
3. Within the same country: how does trade affect the distribution of income among different groups?
4. In terms of trade policy
   – Can we explain why some sectors tend to receive more protection than others?
   – Is it best to retaliate against countries that impose unilateral tariffs?
   – What are trade blocks? What are the effects on the welfare of their members and the rest of the world?
5. Other issues
   – Does international trade undermine the protection of the environment?
   – Ethical considerations like: is trade fair with poor countries? Does trade foster the exploitation of children in poorer countries?