What role does protectionism play in U.S. trade policy?
Trade policies vary from one economy to another. It is vital that each economy adopt a trade policy that will enhance business and protect the interest of its business community. Initially, the art of trade was meant to be a zero sum game. This is a situation where one party gives up something they either have much of, or something they are willing to give up for something else that the other party has too much of or is willing to give up. This was referred to a zero sum game as both parties were declared as winners. However, there is a need to cover one’s self in protectionism as a trade policy. The US for instance use this policy as a bargaining chip to penetrate foreign markets. In this case, the threat of protectionism in the first instance causes the country to engage in free trade agreements(Chorev, 2007).
What are the economic consequences of protectionist policies?
Protectionism has the following economic justifications: Infant industry protection. This tenet asserts that, through adoption of protectionism as a trade policy foreign industry will accord young local industries time to develop. However, the danger that is attached is the fact that, young infant industries will never attain optimality due to lack of competition (Peng, 2009).
Protection against import dumping –for most of the developing countries around the globe, it is important that they impose protectionism trade policy to control the type of imports they get and to avoid the chances of dumping. This is achieved by developing anti dumpingtariff (Peng, 2009).
Who benefits from trade protection? Who is hurt by trade protection?
Protection policies are mainly engaged to protect certain participants from exploitation. They mainly benefit importers as they are covered from being over exploited by the exporters. In this regard, the various import controls usually enhance fair trade. In addition, on the issue of infant industries, protectionism enhances growth of local industries hence fostering economic developments. Protectionism is viewed as hurting the exporter as it curtails their growth into new markets (Peng, 2009).
To support your argument, use at least one specific example of a current protectionist policy
The EU (European Union) has imposed anti dumping measures. This was a reaction from the salmon farmers’complaints to the EU that they are being edged out of business by the Norway imports. This move was thus adopted to foster growth of the farmers and protect their interest while hurting the Norway exporters (Giannakopoulos, 2006).
Part 2: Comments on posts
Reply 1: Hi Nina, I agree with you because the U.S. has increased the economic restrictions. Even though there are a few benefits accrued from the protectionism strategy, the risks of using the strategy are many. Globalization has increased, and countries have opened the economic boundaries to improve international trade. The strategy adopted by the U.S. to protect the industries will be beneficial in the short run, but in the long run, the country will be forced to open the economy.
Reply 2: Hello Kelly, I agree with your comments because protectionism is advantageous in the short run, but there are many disadvantages experienced in the long run. The U.S. uses the restrictions to protect its industries, and improve the welfare of the citizens. However, in the long run, the country will experience sanctions, and few countries will be willing to trade with the country. In addition, the country will not benefit from the international trade because prices of some commodities will be high. International trade improves the prices of products such that the citizens can purchase products at reduced prices. There are other countries with a comparative advantage in the production of commodities, and the U.S. should accept this fact.
Chorev, N. (2007). Remaking U.S. trade policy: From protectionism to globalization. Ithaca [u.a.: Cornell Univ. Press.
Giannakopoulos, T. K. (2006). A concise guide to the EU anti-dumping/anti-subsidies procedures. Alphen a. d. Rijn [u.a.: Kluwer Law Internat.
Peng, M. W. (2009). Global business. Mason, OH: South-Western Cengage Learning.