Protectionism

Definition

Protectionism refers to government policies and actions aimed at shielding a country's domestic industries and markets from foreign competition through the use of tariffs, quotas, subsidies, and other trade barriers. It is a key economic and political strategy that has been employed to support domestic industries and jobs.

5 Must Know Facts For Your Next Test

1. Protectionism was a key political issue in the late 19th and early 20th centuries, with debates over tariff policies and their impact on industries, consumers, and international trade.
2. The Tariff Act of 1930, also known as the Smoot-Hawley Tariff, significantly raised tariffs on a wide range of imported goods, leading to retaliatory tariffs from other countries and contributing to the severity of the Great Depression.
3. During the Hoover administration, the government's protectionist policies, including the Smoot-Hawley Tariff, were criticized for exacerbating the economic downturn and hampering international trade.
4. The Great Depression and the Hoover administration's protectionist measures highlighted the need for a shift in economic policies, paving the way for the New Deal and a more globally-oriented approach under the Roosevelt administration.
5. Protectionism remains a contentious political issue, with debates over the balance between supporting domestic industries and maintaining open international trade and economic cooperation.

Review Questions

• Explain how protectionist policies, such as tariffs and quotas, were used as key political issues in the late 19th and early 20th centuries.
  • Protectionist policies, particularly the use of tariffs and quotas, were central to political debates in the late 19th and early 20th centuries. Supporters of protectionism argued that these measures were necessary to protect domestic industries and jobs from foreign competition, while opponents claimed that they harmed consumers and disrupted international trade. The Tariff Act of 1930, also known as the Smoot-Hawley Tariff, significantly raised tariffs on a wide range of imported goods, leading to retaliatory tariffs from other countries and contributing to the severity of the Great Depression. These protectionist policies were a key political issue during this period, with their impact on the economy and international relations being a major point of contention.
• Assess the role of protectionist policies, such as those implemented during the Hoover administration, in the economic downturn of the Great Depression.
  • The Hoover administration's protectionist policies, including the Smoot-Hawley Tariff, were widely criticized for exacerbating the economic downturn of the Great Depression. By raising tariffs on imported goods, these policies disrupted international trade and led to retaliatory measures from other countries, further hampering the global economy. The protectionist approach adopted by the Hoover administration was seen as a contributing factor to the severity of the Great Depression, as it hindered the free flow of goods and services and undermined economic recovery. This experience highlighted the need for a shift in economic policies, paving the way for the more globally-oriented approach of the New Deal under the Roosevelt administration.
• Evaluate the ongoing debate surrounding protectionism and its role in supporting domestic industries and jobs while maintaining open international trade and economic cooperation.
  • The debate over protectionism remains a contentious political issue, with arguments on both sides. Proponents of protectionism argue that measures such as tariffs and quotas are necessary to support domestic industries and protect jobs from foreign competition. They claim that these policies can help maintain a strong domestic manufacturing base and ensure the viability of strategic industries. On the other hand, opponents of protectionism argue that it disrupts the free flow of goods and services, leading to retaliatory actions from trading partners and ultimately harming consumers and the broader economy. They advocate for more open and cooperative international trade policies that can foster economic growth and development. This ongoing debate highlights the delicate balance between supporting domestic industries and maintaining open global economic cooperation, a challenge that policymakers continue to grapple with in the modern era.

Related terms

Tariffs: Taxes or duties imposed on imported goods, designed to make foreign products more expensive and less competitive compared to domestic products.

Quotas: Limits or restrictions placed on the quantity or volume of specific goods that can be imported into a country, often used to protect domestic industries.

Subsidies: Financial assistance provided by the government to domestic producers, allowing them to sell their goods at lower prices and be more competitive against foreign competitors.