Trade Protectionism
IntermediateTrade protectionism is a government policy of restricting imports from other countries, through measures such as tariffs, quotas and subsidies, to protect domestic industries and jobs from foreign competition.
Protectionist measures make foreign goods more expensive or limit how much can be imported. Common tools include tariffs, which are taxes on imports; quotas, which limit the quantity that can be imported; subsidies to domestic producers; and regulations or standards that make it harder for foreign products to enter the market.
Supporters argue that protectionism can protect jobs in vulnerable industries, help new industries develop before facing full competition, safeguard industries important for national security, and respond to unfair trade practices by other countries.
For example, a government might impose a 25% tariff on imported steel to support its domestic steel producers.
Most economists believe protectionism usually does more harm than good overall. Tariffs raise prices for consumers and for businesses that use imported materials, reduce competition and innovation, and often provoke retaliation from other countries, leading to trade wars that hurt exporters. While some industries may benefit, the costs are typically spread across the whole economy and can outweigh the gains.
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