Protectionism is an economic policy adopted by countries to help their local economy from foreign countries by restricting international trade. In politics, protectionism is expressed in the argument of the globalist vs the nationalist.
The question over its economic significance is discussed continuously since the beginning of the economic science itself.
The critics of protectionism argue that ultimately consumers will be affected in the long term because of the increased prices. However, the assumptions that demand will not be matched with local production is not taken seriously.
The proponents of protectionism argue that increased demand will create more local jobs and more production. Proponents assumptions are that the local economy would be able to supply for the demand by producing locally.
Common policies of protectionism
Most common protectionist policies include tarrifs, import quotas and product standards.
A tax imposed by a government on foreign imports, mostly matching the price in the local economy or more. These tariffs are based on the local economy, trading fairness with other countries. The trade war is a perfect example of using tariffs when there is unfairness in trading.
A limit set on the particular product import (i.e., a fixed number of a particular product can be imported for a fixed amount of time). For example (a fictional one), only 10 ton of steel can be imported into the US from Europe every month.
Multiple safety concerns over a standard of an imported product (esp., edibles). For example: allowing a product to be imported after certain days after production.
International free trade is monitored by the World Trade Organization (WTO). A legal agreement called ‘General Agreement on Tariffs and Trade (GATT)‘ is a framework adopted by WTO members to reduce trade barriers by designing policies to reduce protectionism (tariffs, quotas, etc.,)