Protectionism

Loading the player...

What is 'Protectionism'

Protectionism refers to government actions and policies that restrict or restrain international trade, often done with the intent of protecting local businesses and jobs from foreign competition. Typical methods of protectionism are import tariffs, quotas, subsidies or tax cuts to local businesses and direct state intervention.

BREAKING DOWN 'Protectionism'

Any time a government undertakes any of these actions, they are engaging in protectionism. There is significant debate surrounding the merits of protectionism. Critics argue that, over the long term, protectionism often ends up hurting the people it is intended to protect and often promotes free trade as a superior alternative to protectionism.

RELATED TERMS
  1. Frederic Bastiat

    A 19th-century philosopher and economist famous for his ideas ...
  2. Trade War

    A negative side effect of protectionism that occurs when Country ...
  3. Quota

    A government-imposed trade restriction that limits the number, ...
  4. Tariff

    A tax imposed on imported goods and services. Tariffs are used ...
  5. Multiple Column Tariff

    A tariff system where the tariff rate or import tax assessed ...
  6. Subsidy

    A benefit given by the government to groups or individuals usually ...
Related Articles
  1. Economics

    Explaining Protectionism

    Protectionism is government measures that limit imports into a country to protect commerce within that country against foreign competition.
  2. Economics

    What Is a Quota?

    In business, quota usually refers to the sales target for a salesperson or a sales team.
  3. Personal Finance

    What Is International Trade?

    Everyone's talking about globalization, so we explain what is it and why some oppose it.
  4. Economics

    The Basics Of Tariffs And Trade Barriers

    Everything you need to know - from the different types of tariffs to their effects on the local economy.
  5. Economics

    A Brief History of International Trade Agreements

    Since the mercantilist era, world trade has become increasingly multilateral, but since WW2 there has been a definite rise in regional trade agreements.
  6. Economics

    Tariffs

    Tariffs, or customs duties, are taxes imposed on foreign goods and services. In addition to providing a country with additional revenue, tariffs offer protection to domestic producers. Imported ...
  7. Economics

    What's a Subsidy?

    A subsidy is a benefit given to an individual, business or institution, typically by the government. Subsidies are given to promote a social good or an economic policy. The government usually ...
  8. Professionals

    Tariffs and Quotas

    CFA Level 1 - Tariffs and Quotas. Learn how tariffs, quotas and other trade factors affect the price of imported goods by shifting the market supply curves.
  9. Economics

    Macroeconomics: International Trade

    By Stephen Simpson International trade is the exchange of goods, services and capital across national borders. It is a multi-trillion dollar activity, central to the GDP of many countries, and ...
  10. Economics

    Macroeconomics: Government - Expenditures, Taxes and Debt

    By Stephen Simpson ExternalitiesIn a market economy there are important differences between public and private goods. Private goods are considered "rival and excludable" - one person consuming ...
RELATED FAQS
  1. How does protectionism affect gross domestic product (GDP?)

    Find out how trade protectionism hurts gross domestic product, or GDP, and why trade liberalization helps out domestic and ... Read Answer >>
  2. If left in place long term, what problems does protectionism cause for a country?

    Discover the problems caused by international trade protectionism and why economists support free trade, and review the infamous ... Read Answer >>
  3. How does comparative advantage render protectionism unnecessary?

    Find out how economic theory can debunk protectionist policies in international trade and how comparative advantage demonstrates ... Read Answer >>
  4. How is comparative advantage used as a justification for free trade policies?

    See why comparative advantage leads to the advocacy of free trade policies between international actors and why rent-seeking ... Read Answer >>
  5. How do tariffs protect infant industries?

    Find out why some economists believe that developing markets need protective import tariffs to promote domestic industry, ... Read Answer >>
  6. What are common reasons for governments to implement tariffs?

    Gain a basic understanding of a government-sanctioned import tariff, what it is meant to accomplish and common reasons for ... Read Answer >>
Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  4. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  5. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  6. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
Trading Center