What is meant by trade protectionism?

Trade protectionism refers to government policies and actions taken to restrict or limit international trade in order to protect domestic industries from foreign competition. It involves the implementation of various measures to shield domestic producers from foreign competitors and safeguard local employment and industries.

The primary objective of trade protectionism is to promote and support domestic industries, improve the trade balance, and preserve national economic interests.

Trade protectionist measures can take different forms, including:

1. Tariffs: Imposing taxes or duties on imported goods, making them more expensive and less competitive compared to domestic products.
2. Import quotas: Limiting the quantity or value of specific goods that can be imported into a country during a specified period.
3. Subsidies: Providing financial assistance or incentives to domestic industries to make their products more competitive and reduce their production costs.
4. Regulatory barriers: Implementing strict regulations, standards, or certifications that foreign products must meet, creating additional hurdles for imports.
5. Embargoes and sanctions: Completely banning or restricting trade with specific countries for political or economic reasons.
6. Currency manipulation: Artificially devaluing a country's currency to make exports more competitive and imports more expensive.
7. Domestic content requirements: Mandating a certain percentage of domestic components or labor in products sold within the country.

Trade protectionism is often criticized for hindering economic efficiency, distorting market forces, and reducing overall consumer welfare. It can lead to higher prices for consumers, reduced product choices, retaliation from trading partners, and trade wars. However, proponents argue that protectionism can help shield domestic industries during periods of economic uncertainty or structural adjustment and protect national security interests.