(a)[8]
Explain why the theory of comparative advantage may not provide an accurate picture of the benefits of free trade.
(b)[12]
In April 2018, the United States (US) government threatened to impose tariffs of 25% on a broad range of imports from China including steel, technological products, medicines and household goods such as washing machines. In response, China threatened to retaliate with the same proposed tariff on imports from the US of soya beans, cars and chemicals. Discuss whether the US and China could both benefit from the imposition of tariffs on goods such as those identified.