Protectionism

Protectionism, sometimes referred to as trade protectionism, is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations. Proponents argue that protectionist policies shield the producers, businesses, and workers of the import-competing sector in the country from foreign competitors and raise government revenue. Opponents argue that protectionist policies reduce trade, and adversely affect consumers in general (by raising the cost of imported goods) as well as the producers and workers in export sectors, both in the country implementing protectionist policies and in the countries against which the protections are implemented. Protectionism has been advocated mainly by parties that hold economic nationalist positions, while economically liberal political parties generally support free trade. There is a consensus among economists that protectionism has a negative effect on economic growth and economic welfare, while free trade and the reduction of trade barriers have a significantly positive effect on economic growth. Some scholars, such as Douglas Irwin, have implicated protectionism as the cause of some economic crises, most notably the Great Depression. On the contrary, Paul Krugman, winner of the Nobel Prize for Economics, argues that tariffs had no negative impact during the Great Depression. Although trade liberalization can sometimes result in large and unequally distributed losses and gains, and can, in the short run, cause significant economic dislocation of workers in import-competing sectors, free trade often lowers the costs of goods and services for both producers and consumers.