Competition drives prices down. This leaves more money available for other purchases.
No, it doesn't. Since those who made that product domestically are likely to lose their job or produce less and therefore earn less, they will make zero money. This will leave less money availble for other purchases. Especially when you add the price of social assistance and other things then society as a whole will have to pay to support these people and their family - money obtain by the state by taxing its own citizenry.