Free trade is one of trade policy which you probably will use if you will be focused on economy dominance. For me this system works well because I’m strongly focused on capitalism and economic dominance and today I will show you benefits and potential problems of free trade in Victoria 3.
Best usage of free trade
Free trade law in Victoria 3 will immediately boost your trade because you will get +50% trade route volume so your routes could grow more. Also what is benefit for your is less cost of trade route -50% bureaucracy. This should mean that your trade will be boosted.
But in other way this doesn’t mean that you will get more money from tariffs because all tariffs are gone since you enact free trade. So you get more goods, you could solve faster expensive government goods but you get less money…
… this mean that you need stable income from your taxes before you change this laws. You could also see how much money you need. Bellow on image you could see that you see how much I get when I change law. Let’s look on “change in revenue from current Tariff law” where you could see if I change to Protectionism.
Free-trade could works well if you building custom unions and if you select properly economic system like Laissez-Faire. Main importance of free trade is get more goods and money came from other sources like taxes or dividends.
Problems of free trade in Victoria 3
Free trade law could also bring problems to your country. After implementing this law other big countries could go to your country and make deals with you and you don’t have enough power to close others routes.
If you use protectionism or mercantilism you still could increase tariffs and some nations will close their routes because they aren’t profitable for them. And you will also get some sort of money reward even though they’re taking essential resources from you.
If you have problems you could use “embargo” but this will deform your relations. So best usage of free trade is as I mention above. You need to have strong economy and you need to be prepared that some nations will purchase a lot of from you.
Trade agreement and Custom union
Alternatively there are two diplomatic plays which you should use. First is trade agreement which will optimize tariffs (minimize to zero) and also optimize bureaucracy (minimize to zero) so is something like “free trade” but is between two specific countries and also this will cost you diplomacy.
Second diplomatic play us building custom union in which the power partner will absorb smaller country market into their market. So you’re members of the same market and you have the same prices and the same supply and demand, but expanding that is a bit more challenging and you’ll need obligations.