Protectionism in trade refers to government policies that restrict international trade to help domestic industries. Protectionist policies are usually implemented with the goal to protect domestic industries against foreign competition by means of tariffs, subsidies, import quotas, or other restrictions or handicaps placed on the imports of foreign competitors. The following are some of the primary policy tools a government can use in enacting protectionist policies:
-
Tariffs: Taxes on imported goods that raise the price of imported articles, making them more expensive (and therefore less attractive) than domestic products.
-
Import quotas: Limits on the quantity of a particular good that can be imported into a country.
-
Product standards: Regulations that require imported goods to meet certain standards or specifications.
-
Subsidies: Financial assistance provided by the government to domestic industries to make them more competitive.
Protectionist policies are typically focused on imports but may also involve other aspects of international trade such as product standards and government subsidies. The merits of protectionism are the subject of fierce debate, with some arguing that it can protect domestic industries and create jobs, while others argue that it can lead to higher prices for consumers and reduce economic growth.
