Protectionism

Refers to the use of tariff and non-tariff barriers to limit imports coming into the market.

Types of Protectionism (don’t put the ones in red into the presentation that’s what I’m going to read)

1. Tariffs

The taxes or duties imposed on imports are known as tariffs. Tariffs increase the price of imported goods in the
domestic market, which, consequently, reduces the demand for them.

2. Quotas

Quotas are restrictions on the volume of imports for a particular good or service over a period of time. Quotas are
known as a “non-tariff trade barrier.” A constraint on the supply causes an increase in the prices of imported
goods, reducing the demand in the domestic market.

3. Subsidies

Subsidies are negative taxes or tax credits that are given to domestic producers by the government. They create a
discrepancy between the price faced by consumers and the price faced by producers.

4. Standardization

The government of a country may require all foreign products to adhere to certain guidelines. For instance, the UK
Government may demand that all imported shoes include a certain proportion of leather. Standardization
measures tend to reduce foreign products in the market.

Advantages of Protectionism

More growth opportunities

Lower imports

More jobs

Higher GDP

Disadvantages of Protectionism

Stagnation of technological advancements

Limited choices for consumers

Increase in prices (due to lack of competition

Economic isolation

America’s protectionism act in 1930

The Tariff Act of 1930, commonly known as the Smoot–Hawley Tariff or Hawley–Smoot Tariff, was a law that
implemented protectionist trade policies in the United States. Sponsored by Senator Reed Smoot and
Representative Willis C. Hawley, it was signed by President Herbert Hoover on June 17, 1930. The act raised US
tariffs on over 20,000 imported goods. The Act and tariffs imposed by America's trading partners in retaliation
were major factors of the reduction of American exports and imports by 67% during the Depression.