Protectionism
Tools of protectionism
- Protectionism = protecting home producers from foreign competition.
- tariff — a tax on imports (raises their price),
- quota — a legal limit on the quantity imported,
- subsidy — to home producers, so they undercut rivals,
- embargo — a complete ban,
- administrative barriers — paperwork and tough standards.
Practice
A tariff is:
A tariff taxes imports (raising their price); a quota limits the quantity; an embargo is a ban.
For and against
- For: protect an infant industry, save jobs, stop dumping (selling below cost).
- Against: higher prices for consumers, protects inefficient firms, and risks retaliation.
- A tariff: home producers gain, government gains revenue, but consumers lose and foreign producers lose sales.
Practice
An argument FOR protectionism is to:
Protecting infant industries, saving jobs and stopping dumping are arguments for; higher prices and retaliation are against.
Practice
A tariff generally means that:
Home producers and the government gain; consumers (higher prices) and foreign producers lose.
You've got it
Key idea
- tools: tariff (tax), quota (limit), subsidy, embargo (ban), admin barriers
- for: infant industry, jobs, stop dumping; against: higher prices, inefficiency, retaliation
- a tariff helps producers + government but hurts consumers