What's going on?

The World Trade Organization (WTO), the entity that�s charged with overseeing international trade, has warned that the world�s biggest economies are increasingly introducing rules aimed at limiting trade � which is bad for the global economy.

What does this mean?

When countries agree on trade deals, it�s obviously expected that these are respected. But in the past 6 months, states have increasingly implemented restrictions on previously agreed trade deals. This is indicative of a global environment that has become more hostile to free trade (a term that�s usually used to describe agreements that significantly curtail barriers to trade, e.g. taxes on goods being imported). Perhaps most visibly, the presidential campaigns of Donald Trump and Bernie Sanders have focused on so-called �protectionist� measures that deter international trade. The Brexit vote in Britain is also a potential threat to trade.

Why should I care?

For you personally: Whether or not free trade is good for you depends on your circumstances. If you�re an auto worker in Michigan, there�s a significant risk of your job being moved to Mexico (of course, if you�re a skilled worker living in Mexico, that�s a good thing). At the same time, many of the products you buy are cheaper because they�re made in lower-cost locations. You can see it�s a trade-off. But the theory is that, overall, the economy is a winner due to free trade (although some economists argue otherwise).

For the markets: Big companies � and their investors � usually love free trade. Most would argue that it makes sense that big companies would want to produce their goods in countries that have low labor costs. It�s also understandable that businesses like free trade because it allows them to access new markets/regions (e.g. Apple will shortly open its first store in India). So, generally speaking, it�s a negative for big companies and their shareholders if international trade becomes more costly due to action by governments.