Following are the major demerits (disadvantages) of foreign trade-
1-Prompt termination of raw material-
Due to foreign trade, there is a huge increase in the demand for manufactured goods/primary goods. Due to which the reserves of raw materials, mainly minerals, in some countries are exhausted soon.
2- Loss to domestic industries-
Sometimes foreign competition proves to be a major factor in the development of domestic (indigenous) industries, for example, in the 19th century, Indian industries were hit hard by British competition.
3-Effects of Rashpapan-
When the developed countries adopt the policy of falling money for the consumption of their goods in the developing countries, they have a great impact on the indigenous industries.
4-Single development of the country’s economy-
Due to the division of labor induced by foreign trade, only those goods are produced in the country, from which it benefits, the result is not all-round development of the country and many resources of the country remain idle. This one-sided development from the point of view of security is exceedingly fatal.
5-Dependency on foreigners-
Due to foreign trade, almost all countries become dependent on each other. This has an adverse effect on economic development.
6-Lack of essential commodities-
If ever due to specific circumstances the rectangle of any essential item gets closed. So the people have to suffer.
7-Damage to agriculture-dominated economies-
Agricultural economies used from foreign trade suffer losses, because the production cost increases due to the depreciation rule being active in the agricultural sector.
8- Conflict and animosity in the international arena-
Due to conflict of interest during foreign trade, a situation of tension often arises between different countries. Due to which world peace is threatened.
Political colonies are sometimes formed as a result of foreign trade. These colonies become slaves of only countries in economic terms.