Protectism

Protectionism



Protectionism is the process in which domestic markets are protected of overseas products flooding our markets, in other words protectionism is to discourage imports. Trade Protectionism is adopted by all countries of the world and in some way or another protectionism policies are exercised to some extent. There are a large number of ways in which a country may choose to erect trade barriers for example, tariffs and quotas.

By definition a tariff is said to be a tax on imports and can be used by governments as revenue and it as financial spending. A tariff is setup in order to encourage domestic producers. When an imported product is taxed the price of the product is increased, for example Japan may sell a car for $30 000 and with an introduction of a tariff this car could be now worth $35 000. The new price now sets up a demand for a different car in being a domestic car. Therefore domestic producers are protected from the inflow of cheaper products.

Anothe...