Trade Protectionism Put to the Test Essay -- Essays Papers

Trade Protectionism Put to the Test The idea behind trade protectionism as policy is that domestic industry cannot or should not have to compete with imports from foreign producers and that domestic workers’ jobs are at risk when trade is unrestricted. Most economists, and a large portion of the public would agree when looking at the big picture that free trade is positive for importers and exporters, as well as consumers. The very basic theories of comparative advantage, specialization and trade make a compelling argument for trade without barriers. Trade based on comparative advantage produces higher outputs for both importers and exporters, higher quality of goods, lower prices, greater varieties of goods from which to select, and an overall greater sense of economic well-being. The disadvantages of implementing quotas, tariffs, or other forms of barriers to trade far outweigh any perceived advantages. There are cases to prove that more jobs are actually lost under protectionism than saved. Historicall y, trade barriers result in higher prices to consumers, higher taxes (taxes on imported goods as well as those to cover additional bureaucratic infrastructure to force compliance with trade restrictions), developing counties that have no way to repay debt as their ability to export is squashed, and trade wars that have proven a deterrent to world peace. This paper will look at the evidence that trade protectionism has an overwhelmingly harmful effect on developing countries. It creates and rewards inefficiency in the marketplace. It benefits only special interest groups while the masses are forced to pay higher prices for lesser quality and choice. The costs (both monetary and non-monetary) far outweigh any benefi... ...some military conflicts. During the 17th and 18th centuries in Europe, mercantilism led to nonstop wars in efforts to expand empires and build larger markets. The American Revolution and the Civil War can be said to have many issues at their core, not lease of which were tariffs and export restrictions. In 1930, the Smoot-Hawley Act, was signed by President Hoover and raised tariffs (some as much as 100%). What followed were similar trade restrictions implemented by other countries. This was followed immediately by the Great Depression and then by World War II. Obviously, these historical examples do not represent empirical data to connect trade protectionism to war and unrest. However, it is enough to give pause for thought to consider the possibility that trade restriction policies (and those created in retaliation) may create and feed hostility and ill will.