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5. Protectionism
Definition:
Protectionism is when a government uses trade barriers to protect domestic industries
from foreign competition — the opposite of free trade.
Tariff
Subsidy
Import Quota
Administrative
Barriers
Types of Trade Barriers:
Barrier Type
Explanation
Complicated paperwork, strict
health/safety standards, or long
approval processes for imports.
Government financial aid to local
producers.
A tax on imports. Makes imported
goods more expensive, reducing
demand for them.
A limit on the quantity of a particular
product that can be imported.
Why Governments Use Protectionism
● To protect new (infant) industries that cannot yet compete globally.
● To save domestic jobs by supporting local production.
Effect
Discourages foreign
competition indirectly.
Ensures domestic
producers have a larger
share of the market.
Allows them to sell goods
at lower prices and remain
competitive.
Protects local producers
but raises consumer prices.