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Understanding Protectionism Policies

Protectionism is a policy that encourages domestic industries through subsidies or imposing tariffs and customs duties on imported foreign goods. Governments intervene in international trade for both economic and non-economic reasons, usually called protection. Under protectionism, governments use tariff barriers, imposing high customs duties on imports to make foreign goods more expensive, and non-tariff barriers like quotas, exchange controls, subsidies, and state trading to reduce imports and increase exports. Non-tariff barriers are now used more than tariff barriers.

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Suniel Chhetri
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12 views1 page

Understanding Protectionism Policies

Protectionism is a policy that encourages domestic industries through subsidies or imposing tariffs and customs duties on imported foreign goods. Governments intervene in international trade for both economic and non-economic reasons, usually called protection. Under protectionism, governments use tariff barriers, imposing high customs duties on imports to make foreign goods more expensive, and non-tariff barriers like quotas, exchange controls, subsidies, and state trading to reduce imports and increase exports. Non-tariff barriers are now used more than tariff barriers.

Uploaded by

Suniel Chhetri
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

Protectionism

The policy to encourage domestic industries by providing subsidy or imposing tariff or costum
duties on import of foreign goods in called protection policy. As opined by [Link] and
[Link], Governments intervene in international trade for both economic and non-economic
reasons. Such intervention is usually called protection.

Under this policy, two types of instruments are used: -

(a) Tariff barrier, and

(b) Non-tariff barrier

Under tariff barrier, the government imposes high custom duties on the import of foreign goods.
Consequently, foreign goods become expensive and the imports decline or stop. On the other
hand, under non-tariff barrier, the quota system, exchange control, subsidy, trade by government
are used as the weapons of import control. The quota system, exchange control and trade by
government reduce imports, while the direct subsidy, subsidized credit increase the exports. In
present time, the non-tax barriers are used more than the tax barriers.

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