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Protectionism

In: Business and Management

Submitted By uniheaven
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Trade protectionism is any economic policy by a government to impose restrictions on import goods and services, provide special preferences to domestic goods and services to enhance the competition. There are two basic ways of trade protectionism, one is tariff barrier, another is called non-tariff barriers, including quotas, subsides and administrative barriers. This essay is to talk about the main ways of protectionism and its definition with some real examples.

Tariffs are import taxes, raising the price of imported products to limit the number of imports, causing a contraction in domestic demand and an expansion in domestic supply (Riley, 2006). Normally, the volume of imports is reduced and the government received some tax revenue from the tariff. While, the Section 201 steel tariff is another case. In 2002, US imposed tariffs on imports of certain steel products for three years and one day (Francois & Baughman, 2003). Immediately, the European Union announced that it would impose retaliatory tariffs on the U.S., thus risking the start of a major trade war (Francois & Baughman, 2003). In this way, the price of both sides got higher, made impacts on each other. Steel tariffs caused shortages of imported product and put U.S. manufacturers of steel-containing products at a disadvantage relative to their foreign competitors. As a result, 200,000 Americans lost their jobs to higher steel prices during 2002. In the absence of the tariffs, the damage to steel consuming employment would have been significantly less than it was in 2002 (Francois & Baughman, 2003).

Quotas is a type of protectionist trade restriction that sets a physical limit on the quantity of a good that can be imported into a country in a given period of time. Quotas, like other trade restrictions, are used to benefit the producers of a good in a domestic economy at the expense of all…...

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