Government protectionism australia

Protectionism is still widely practiced despite the strong advocacy for free trade and increasing trade openness (Cheong & Tongzon, 2018). The main motives for protection include protecting infant and declining industries, deterring unfair competition, protecting strategic industries, helping the environment, protecting the non-renewable resources, saving jobs and limiting over-specialization. Trade protectionism is one of the key strategies used by the United States to protect its strategic interest. The U. S has never been a truly free trade nation as many believe. The situation has placed the largest economist in the world at loggerhead. The push for government protectionism by the Trump administration has triggered a trade war, and the largest world economies are attacking each other’s trade with quotas and taxes (Jackson & Shepotylo, 2018).

The U. S. government has placed tariffs on goods worth billions of dollars from China. Certain policy makers, domestic manufacturers, and consumer advocates claim that foreign-based products may fail to satisfy the requirements for safety in the process of manufacturing and distribution. Therefore, leading to severe illness, unsafe products and possible death of consumers. The domestic manufactures in the U. S. claim that unlike foreign producers who may not follow the government imposed safety and production requirements, they must follow the strict requirements making their products safer (Noland, 2018). Quotas are the use of direct restriction on the amount of certain products or commodities that may be permitted to be imported into a nation. The enforcement of import quotas is done through the issuance of import licenses to a specific group of persons or companies.

An exporting nation can also impose trade quota in the form of voluntary export restraint (VER). VERs can be enforced as political pressure by another country with the aim of stopping the export of goods or commodities (Eichengreen & Irwin, 2009). Subsidies are payments provided by a government to producers of domestic products. Administrative policies also entail setting high standards of health and safety and imports licenses that are difficult to obtain. The enactment of antidumping policies focuses on preventing the sale of goods in a foreign market at a price that is below the costs of production with the aim of gaining a substantial share of the nation’s market. Regulations that prohibit the sale of goods below its fair market value is an example of anti-dumping rules (Mastel, 2016).

A country can make its product cheaper abroad by using exchange rate controls. The strategy entails lowering the value of its currency in the foreign exchange markets. The inaugural speech of the U. S president stated that protection is crucial in realizing great prosperity and strength. Trump promised to change the tide on globalization during his campaign (Knight, 2015). Other developments in the global trade environment have also occurred in recent times. There has been a rapid expansion in the number and scope of bilateral and regional trade agreements. Exchange rate controls have been associated with long-term inflation. The prices of foreign products sold whose currency value has been decreased will rise. As a result, consumers will have to pay more products and services they need to survive (Gareau, 2017).

The good intention of helping domestic industries become competitive abroad ends up hurting the citizens. Trade war among nations is considered to be a critical adverse effect of government protectionism. However, it is essential to note that an increase in inequality is a reflection of other disruptions such as technological innovation, and trade is used as a scapegoat (Knight, 2015). Lower-income households’ benefit from lowered prices brought about by open markets. Protectionism has been on the rise since the financial crisis in 2007. The World Trade Organization (WTO) has raised concern over the increased in protectionism since it is a threat to the struggling global economy. Protectionist pressure is expected to continue building as along the weakness in the global economy persist. is engaged in trade protectionism to protect its jobs and industries.

Protecting the livelihood of workers as well as the industries and firms that employ them is vital for the growth and the wellbeing of the nation. The proponents of the policy argue that a nation could risk losing long-established industries and companies eventually resulting in loss of jobs, increased unemployment and a decrease in the gross domestic product (GDP) of a nation. Most scholars argue that protectionism hurts the economy of both the nation practicing it and the global economy at large. References Baldwin, R. http://repository. mdu. in. ua/jspui/handle/123456789/684 Cheong, I. Diffusion of new protectionism and trade policies of major countries in Asia. com/doi/abs/10. 1108/JKT-03-2018-0025 Eichengreen, B. , & Irwin, D. The protectionist temptation: Lessons from the Great Depression for today.