Trade Protectionism Is A Policy That Restricts The Imports Of Goods Essay

Main protectionist policies include tariffs, quotas, embargos and voluntary export restraints, and Adam Smith’s idea of absolute advantage has been developed further to explain international trade. In recent years, protectionism has become closely related to globalization during which the influences of trades spread almost everywhere, so people insist upon the study of social deformities generated by improper policies on international trade and the task of pointing them out with a view to remedy. There are certainly both economic and political purposes of trade

Protectionism by way of the price mechanisms such as tariffs, subsides, quotas, export licences and import duties (Rugman, 2009) are just some of the measures which can seriously impact on a foreign company. For example the American steel industry was afforded protection under the Bush administration when large tariffs were imposed on foreign steel imports in order to safeguard the jobs of the national steel workers (Mankiw and Taylor, 2008).

An important part of managing the economic status of a nation is to manage the methods in which goods and services are imported and exported into and out of the country. Because of differing resources, labor costs, and government support of industry, fiscal policy sometimes includes placing a tariff on imported goods in an attempt to level the economic playing field.

One form of protectionism is to place limit on the amount of an incoming product. This is called

control over trade between states and countries. While the purpose of this tariff is completely

As a result, they are forced to move their business into other countries or make their costs more competitive in order to compete with domestic industries. Moreover, once a country enforces protectionism on their products, other countries tend to retaliate by enforcing even stronger protectionist policies. This is called a “trade war” and further prevents international businesses from exporting their products to other countries without paying high tariffs. An example of this is how the United States enforced extremely heavy protectionist policies on their products and services against Canada’s airplanes and other products. This greatly hurt Canada’s industries, and they retaliated by increasing the tariffs on their products; thus creating a trade

As a result, of rising opportunity costs, domestic production may stop short of complete specialization. However, if a large group of people and nations are benefiting from specialization and in international exchange, the government has the power to restrict the free flow of imports or encourage exports. Government can interfere with free trade by protective tariffs, import quotas, nontariff barriers, and export subsidies. Protective tariffs are tariffs that are enacted with the aim of protecting a domestic industry. Import tariffs limits on the quantities or total value of specific items that may be imported. Nontariff barriers is a form of restrictive trade where barriers to trade are set up and take a form other than a tariff. While export subsidies is a government policy to encourage export of goods and discourage sale of goods on the domestic market through direct payments, low-cost loans, tax relief for exporters, or government-financed international advertising. In executing barriers against imports, the nations whose exports suffer may retaliate with trade barriers of their own, creating a trade

First, one of the restrictions to free trade is tariff. According to Menlo-Atherton High School (2015), a tax that is put on imported goods from abroad is known as tariff. Tariff is used to raise the price of imported goods so that the domestic producers can sell their similar goods at higher prices. Domestic government will be the one collecting the money that is received from tariff. Protective tariffs and revenue tariffs are the types of tariff. Protective tariffs are put on imported goods so that it will be more expensive. It is used to protect the domestic industries from the competition of foreign firms. Revenue tariffs are used to raise money for government (Menlo-Atherton High School, 2015). The benefit of tariffs are uneven due to tariff is a tax. Besides that government is benefited, domestic industries are benefit from it as well due to the reduction of competition from foreign productions. It is because of the increased prices of the imported products. However, it is unfortunate for the consumers because the higher price of goods is due to higher import price. Tariff tends to bring advantages for government and producers but not to the

➢ Tariffs–Tariff is a government tax that is use to protect the domestic companies by inflict on goods and services with the intention of being imported or exported from a country

One of the greatest international economic debates of all time has been the issue of free trade versus protectionism. Proponents of free trade believe in opening the global market, with as few restrictions on trade as possible. Proponents of protectionism believe in concentrating on the welfare of the domestic economy by limiting the open-market policy of the United States. However, what effects does this policy have for the international market and the other respective countries in this market? The question is not as complex as it may seem. Both sides have strong opinions representing their respective viewpoints, and even the population of the United States is divided when it comes to taking a stand in

The key important role of government intervene in international trade is interest to protect the domestic producers in their country. Political arguments concerned with protecting the interests of one group, which are producers often at the expense of another within a nation, which are consumers. First, government should protect jobs and

Economic policy of nations and states, tariffs are tools used to control the flow of goods, services and resources being brought into the country. The overall purpose is to create security for the domestic industry from the imported product. These products can sometimes be less expensive to purchase than the goods being manufactured in the local economy. (McEachern, 2015) The government does this either stimulate or deflate trade with other countries. (Fontinelle, 2012)

Free trade has long be seen by economists as being essential in promoting effective use of natural resources, employment, reduction of poverty and diversity of products for consumers. But the concept of free trade has had many barriers to over come. Including government practices by developed countries, under public and corporate pressures, to protect domestic firms from cheap foreign products. But as history has shown us time and time again is that protectionist measures imposed by governments has almost always had negative effects on the local and world economies. These protectionist measures also hurt developing countries trying to inter into the international trade markets.

Ever since the first involvement of government in international trade, many people have posed their opinion about what the role of government should be in it. Different factors are involved when it comes to deciding what this should be. It impacts a lot of people, so in order to do that, trade policy must be properly defined, identify what the roles of government currently are, and their involvement in it, and then analyse what should be their role. Trade policy is how a country carries out trade with other countries (Commercial Policy, n.d). Even though a lot of people support government intervention in international trade, countries would benefit a lot more if the government removes protectionism and promotes free trade instead.

Governments intervene in international trade through use of tariffs that are levied on both imports and exports. The government may either impose fixed tariffs that are calculated per unit of the import commodity or the ad valorem tariff that is calculated as a fixed percentage of the monetary value of the imported commodity. The government imposes high import tariffs in order to control the rate of imports by making the imports more expensive in comparison to the domestically produced substitutes. The tariffs increase the prices of goods and services thus reducing the quantity demanded (Misra and Yadav 2009). The use of tariffs is detrimental to international trade since it lowers competition and results in high prices of commodities in the markets. The tariffs discourage imports and domestic producers benefit from the higher prices and reduction in competition. The EU uses variable