Protectionism refers to government policies that restrict international trade to help domestic industries. These policies aim to boost economic activity within a domestic economy and address safety or quality concerns.
Key Takeaways
- Protectionist policies place specific restrictions on international trade to benefit a domestic economy.
- Such policies seek to improve economic activity but may also arise from safety or quality concerns.
- Economists and policymakers debate the value of protectionism.
- Governments use tools like tariffs, import quotas, product standards, and subsidies to enact protectionist policies.
Types Of Protectionist Tools
Tariffs
Import tariffs are a primary tool for enacting protectionist policies. These tariffs are charged to the importing country and raise the price of imported goods. Various types of tariffs include:
- Scientific Tariffs: Imposed on an item-by-item basis, raising prices for both importers and end buyers.
- Peril Point Tariffs: Focused on industries that may be significantly harmed if tariff rates change.
- Retaliatory Tariffs: Enacted mainly as a response to excessive duties imposed by trading partners.
Import Quotas
Import quotas limit the number of products that can be imported over a specific period. This measure aims to supply a specified amount of products while increasing domestic demand to cover any shortfall. Quotas can also prevent dumping where foreign producers export goods below production costs. An extreme form of quota is an embargo, which completely prohibits the importation of specific products.
Product Standards
Product standards address concerns related to product safety and quality. These standards can restrict imports based on countries’ regulatory controls. For instance, U.S. regulations require French cheeses made with raw milk to be aged at least 60 days before being imported, blocking entry for many popular varieties.
Government Subsidies
Government subsidies come in direct forms like cash payments or indirect forms like tax breaks. These can support production, employment, and exports. Export subsidies, for instance, incentivize domestic businesses to expand globally by increasing international exports.
Examples of Protectionism
Common examples include tariffs, quotas, and subsidies. These tools aim to promote domestic companies by rendering foreign goods more expensive or less accessible.
Is Protectionism Left-Wing or Right-Wing Politics?
Traditionally, protectionism is seen as a left-wing policy aimed at supporting economic populism. In contrast, right-wing politics generally support free trade, the opposite of a protectionist stance.
Arguments for Protectionism
Supporters believe that protectionist policies safeguard domestic jobs, nurture small companies and industries, and provide an additional layer of national security.
Related Terms: Imports, Subsidies, Tariffs, Quotas, Dumping, Embargo, Economic Populism.
References
- Food & Drug Administration. “Joint FDA / Health Canada Quantitative Assessment of the Risk of Listeriosis from Soft-Ripened Cheese Consumption in the United States and Canada: Report”, Page 88.
