Adding Arguments Increases Docker Image Size

I added two ARG’s in the Dockerfile and the image size went up by 200MB is there a way to prevent this or is there a better alternative?

You could try to run a docker history YOUR_IMAGE. This tells you which layer of your image consumes how much space.
If your docker installation is quite up to date, you also can build your image with docker build --squash. This compresses all layers into one.

is the squash flag for a newer version of docker?

introduced with Docker 13 / 17.03.

I found this blog post very useful in explaining how a docker image is composed. And this blog post explains on image sizing.