* Which is more useful - the on-play effect, or the reaction?
This is the wrong question, because the reaction and the action are joined at the hip (compare Caravan Guard, contrast Moat). Horse Traders needs to discard stuff; its reaction gives you an extra card as fuel. I don't think it really matters what type of Attack you are "blocking," outside the super cases like Pillage. It's tempting to think that Horse Traders is better against Discarders because it nullifies the attack, but it's really just a reset; you still get -2 cards from the HT itself. Against Junkers you get 6 cards, and your HT can discard the junk for cash.
Anyway, HT gets much better in the presence of Attacks. Otherwise I think it's only worth considering for a $5 slingshot or if it's the only buy.
* How does it compare to Wine Merchant?
Horse Traders has much better art.
You take that back this instant!