International trade significantly impacts domestic labor markets by creating new job opportunities and altering existing ones. It encourages economic growth, as countries specialize in what they produce most efficiently. However, it can also lead to job displacement in industries less competitive on a global scale, ultimately affecting local communities. Trade agreements may facilitate job creation in some sectors, while causing unemployment in others. This dynamic can exacerbate income inequality and necessitate policies in worker retraining and education to enable workers to adapt successfully to evolving labor market demands.