Protectionism

Statement

Protectionism refers to the act of sheltering domestic industries from foreign competition.

Notes

Protectionism is the deliberate departure from free trade — trade without restrictions. It is pursued because the costs of trade fall unevenly on domestic producers and workers, and governments may act to shield them. The instruments — tariffs and the various non-tariff measures — and the arguments advanced for using them are treated in the reasons for protectionism. All of them work by raising the effective price or limiting the quantity of imports, inducing consumers and producers to switch towards domestically produced goods.