Question

Many nations, including the U.S., use various tools to restrict trade. What kind of arguments can you imagine for pursuing such policies? Are these valid arguments? Please support your answer.

Answer 1

There are different arguments that can be imagined for implementing these policies. The first argument is the protection of domestic industries, jobs of domestic workers also called as infant industry argument. For example, Trump administration restricted still imports from EU, China and other nations. It was due to the reason is that it was cheaper, making domestic steel industry to suffer and people getting unemployed. The second argument is national defense and security argument where USA restricts trade with a particular nation if it can harm their country of USA. It has been observed with trade ban against Cuba and Iran that can be seen as a potential harm to the country's security. The third argument is the dumping policies by the exporting nations that can destroy the domestic industries. It is the reason for the present US china trade war where USA wants renegotiation of the trade relations.

The valid argument is the national defense argument and argument related to the dumping of the goods. As defense of  the country is most important, then it can be considered as valid argument for trade restrictions. Dumping of goods by the exporting nations is backed by the government of exporting nations to destroy the domestic industries of importing nations. Hence, trade restriction to be implemented to make a level playing field.

But, infant industry argument does not become to be valid, as protection to these industries can make inefficient and sell products at higher price. It makes consumers to spend more in these goods and spend less on other goods of other industries. It decreases the demand for other industries and workers are laid off in those industries. So, such a protection, negatively affects the economy.