Essay on Protectionism: Advantages & Disadvantages of Tariffs

Introduction

Protectionism is a widely used policy in the 19th century and mainly aimed at restraining imports to protect industries (Barattieri, Cacciatore & Ghironi, 2018). Measures taken under protectionism included tariffs and quotas on imported goods, together with subsidies for ensuring fair competition between local goods and imported goods.

Advantages and Disadvantages of Protectionist Tariffs

Advantages of trade protectionism involve helping a nation's domestic economy evolve new industries, thus avoiding being quashed by imports obtained from other head start countries. This leads to a trade balance and upcoming domestic industry's protection. The evolving industries add to a nation's economic growth, the creation of jobs, and an overall country’s wealth increase (Barattieri, Cacciatore & Ghironi, 2018).

Disadvantages include failure to have economic efficiency from an economic view. It also leads to reduced choice for consumers who end up paying a premium for a better-manufactured import or even being denied the capability to obtain it all within the domestic market. As a result, it reduces the living standards of the citizens. It also puts countries into worries regarding retaliation from other nations, as stated by Barattieri, Cacciatore and Ghironi (2018).

Impacts of Globalization on the U.S. Economy

Globalization led to the growth of many national corporations. The corporations were capable of merging into other nations, thus increasing bottom lines, relaxed regulations, and cheaper labor. It also places the U.S in a position of increasing trade within services, food agricultural products, manufacturing, hence enabling Americans to purchase cheaper and more abundant consumer products and creating extra U.S jobs.

Free Trade and Economic Growth & Recovery

According to Villareal and Fergusson (2017), data from the International Monetary Fund indicates that the global economy will shrink by 3% in 2020. By 2021 this figure will rise to 6%, and as the world encounters more shrinking of the economic pie, we need to embrace policies that promote free and open trade, which in the long run will return the GDP to levels it was before the COVID pandemic.

Free trade drives enhanced efficiency, economic growth, and increased innovation. It increases access to higher-quality and low-priced goods. The antidote to economic crisis/downtime is free, fair, and open trade coupled with increased international cooperation. Any country can only achieve this by focusing on structural transformations within their governments and multilateral global trade institutions.

References

Barattieri, A., Cacciatore, M., & Ghironi, F. (2018). Protectionism and the business cycle (No. w24353). National Bureau of Economic Research. https://doi.org/10.3386/w24353

Villareal, M., & Fergusson, I. F. (2017). The North American Free Trade Agreement (NAFTA). https://doi.org/10.1163/1570-6664_iyb_sim_org_2292