Question

In your opinion, do trade protectionist policies and trade barriers hurt or help the American economy? Explain. Minimum 400 words please cite sources

Answer 1

Trade protectionism is a policy which protects domestic industries from outside unfair competition. The four main tools are tariffs, subsidies, quotas and currency manipulation. Protectionism is a defensive measure which is politically motivated. It does work in the short run. Yet, in the long term, it is very harmful. This makes international trade less profitable for the country and its industries. In the long term the market is harmed by trade protectionism. Despite competition, businesses do not need to innovate within the industry. The domestic product would ultimately decline in price, and be more costly than what foreign competitors make. Task outsourcing is a result of increasing competition in the US. Competition declined from decades when the U.S. did not invest in education. This is especially true for high technology, engineering, and research. Increased competition opens up new opportunities for companies to sell their goods.

Increasing U.S. protectionism would slow economic growth even further. It would prompt more, not less, layoffs. If the US locks its doors, so will other countries do the same. That could result in unemployment among the 12 million U.S. employees owing their employment to exports. Protectionism is detrimental to everyone in a global economy. In the long run, Trump's "America First" economic policy may be hurting the US economy. Tariff implementation has caused retaliatory tariffs on imports from China, Canada, the EU, Mexico and India. A trade war with these big economies has serious implications for U.S. exporters and the labor force.

Yet, the regional customers will be the instant losers. They will be forced to pay rates which are unsustainable. High costs could cause worldwide inflation. Free trade agreements could move the world economy forward. While unfavorable to uncompetitive domestic industries, these are improving local industries that are capable of producing economies of scale that are greater than those of other nations.

To addition to the negative impact on American productivity, rising inflation has yet another growth-dampening effect: higher prices decrease American consumers ' purchasing power. Demand for goods and services is therefore diminishing in America. US businesses have to slash their production because they can't sell all of their goods. The effect is an extra work and profit cut. US businesses have to slash their production because they can't sell all of their goods. The effect is an extra work and wage reduction.

In short, economic isolation has negative economic implications for the nation that aims to increase employment and income by barriers to tariffs and non-tariffs.

Source- Book on Free Trade and Prosperity: How Openness Helps Developing Countries Grow Richer and Combat Poverty