Protectionism vs. Free Trade

Motivation • “Protectionism is the ally of isolationism, and isolationism is the Dracula of American foreign policy.” – William G Hyland

Protectionism • The idea that we should limit trade to protect our self-interest.

• A tax on imports.

Tariffs

Protective Tariffs • Tariffs used to limit international trade in order to protect a country’s own interest.

• Usually an elastic demanded product.

Revenue Tariffs • Tariffs that are used primarily to raise money for the government.

• Usually an inelastic demanded product.

Quota • A limit on the number of imports and exports.

Embargoes • When a country halts the export and import of a product or a group of products to or from another country.

Standards • A requirement that foreign goods meet a certain stiff requirement.

Subsidy • A payment made by the government to encourage some activity (opposite of a tax).

Price Ramification • Graphing the use of protectionism.