Question

Protectionism or Free Trade Engagement? What are the arguments for both? Discuss areas for or against protectionism.

Answer 1

Free trade means exactly as the name implies: open and unrestrained trade between nations, unrestrained by high tariffs, and where goods can cross borders without any restrictions. Protectionism, on the other hand, also means as the term implies: It is the mechanism in which governments impose tariffs on heavy taxes as well as a host of stringent consumer restrictions that other countries wish to sell.
The net effect is that the torrent of product that comes into a nation slows to a trickle. A prime example of protectionism is Trump's attempts to impose tariffs on certain U.S. trading partners. China's and other U.S. trading partners' claims that trading should be unregulated are an example of free trade

US has a trade deficit with China amounting to $375 billion. The Trump administration had been involved in heated negotiations with China as of June 2018 to knock off that deficit by forcing China to open its markets. Protectionism however is a slippery slope. Compared to that, the US sought protectionism by enforcing strong tariffs on its European trading partners. The outcome: The Great Depression. The Smoot-Hawley tariff was enacted in the United States in the early 1930's, sparking "the most infamous case of protectionism in history

International trade restrictions also hurt the very people they want to protect: American consumers and producers. Protectionism limits choices about what Americans can buy, and drives up the prices of everything from clothing and grocery to the materials manufacturers use to make everyday products.

Yet the very same claim that supports protectionism is a big negative against free trade: free trade appears to raise trade deficits to potentially catastrophic levels in certain nations. America has a growing trade gap with almost every nation it deals with Each dollar of trade imbalance, typically caused by free trade, means a dollar taken from U.S. jobs and then goes to overseas labor. Compared in many nations, the result is lost employment in the U.S., in significantly lower labor rates and also gaining employment through industry assisted by government assistance.

Free trade is increasing the scale of the entire economy. This allows for the more productive production of goods and services. This is because it promotes the development of products or services where they are ideally suited to natural resources , facilities, or skills and expertise. This increases productivity, which in the long run will lead to higher salaries. There is broad consensus that the increasing global trade has increased economic growth in recent decades. Protectionism, by contrast, may lead to disruptive trade wars that raise prices and uncertainty as each side seeks to defend its own economy. Protectionist rules can tend to favour big business and vested interests, as they have the resource to lobby most effectively

Protectionism can help to develop new industries as well. New firms may find it difficult to compete in sectors with high start-up costs if there is no government support in the form of tariffs or subsidies. These barriers can be eliminated after they have become successful. This can be used to secure 'strategic' industries such as oil , water, steel, armaments and food. For instance, 'food security' can be seen as significant, because we can feed ourselves if anything horrible happens to interrupt the world trade system.