PROTECTIONISM AND TRADE:

A COUNTRY’S GLORY OR
DOOM?

T03 Wednesday 8 a.m. – 9 p.m.

Group 5: Jessica James Emelie Guth and Kamera Right
 Introduction
■ Free trade speaks to trading of products and services inside and among
states without constraints and government and trade institutions intrusion.
■ Protectionism is an economic policy of restricting trade between
countries, which could be seen as the opposite of free trade. These
restrictions could be for example: high tariffs on imported or exported
goods, restriction quotas, governmental restrictions to discourage imports
and anti-dumping laws to protect from foreign take-over and competition.
 Protectionism
■ A country's protectionism means the protection of home industries or
‘infant’ industries as well as producers and consumers. There is a comfort
about staying within the national borders and not having to think or care
of external trade complications.
■ The biggest disadvantage with border crossing trade is the currencies of
other countries. Other risks regards political, currency, transportation,
financial and regarding exchange rates.
■ Protectionism is accused as a major cause of war. In the 17th and 18th
century in Europe when countries were primarily mercantilist and
protectionist and war broke out at many times
■ The former US President Hoover ignored over 1000 economists warning
to raise tariffs to 100% level, leading to about 25 other countries doing
the same as revenge international trade stopping completely and the
world entered the era of global depression. Which is seen as one of the
reasons leading up to World War 2. To conclude, protectionism leads to
trade wars that have a negative impact for all parties involved.
Example that speaks to Free Trade and
Protectionism
■ “For example, in a January 2018
speech at the World Economic
Forum in Davos, he declared,
“America first does not mean
America alone,” adding “We
support free trade but it needs to be
fair and it needs to be reciprocal
because, in the end, unfair trade
undermines us all.” In June, he
challenged the G-7 to eliminate all
tariffs, barriers and subsidies.
“That’s the way it should be,” he
stated.(Ludema, 2018).”
 Free Trade Advantages and Disadvantages
Advantages:
■ It increases economic growth and raises living standards.
■ Generation of jobs
■ Enables states to specialize in the production of products and services
which they have a comparative advantage.
Disadvantages:
■ Price fluctuations due to environmental factors.
■ Goods have a low income elasticity of demand
■ It is impotent for increasing income for the government because imported
taxes can be used to raise money for the government.
■ Free trade is harmful to the environment because least developed
countries may use up natural reserves of raw materials for export.
 The Banana wars

■ The banana industry was king, thus producers of bananas, Africans

colonies, the Caribbean and the pacific islands were granted trading
status by Europe.
■ The U.S. government was displeased with Europe on the basis that
Europe annually imported 2.5 billion tonnes of bananas from the
Caribbean hence Europe suffered a 100% trade sanctions on their
products in 1999.
■ Additionally most of the Caribbean nation-states depend on the banana
industry for basic survival for instance Dominica receives 70% earnings
from these exports.
■ Caribbean producers of bananas may stray to human trafficking, selling
drugs and move to America illegally for better life if the U.S. stops the
incentives.
■ Hence, the European products were freed from the sanctions on the basis
they imports Latin America and United States bananas as well thus, the
banana wars ended.
 Conclusion
■ Worldwide majority of the countries lost faith in protection
however the rest places it on a pedestal.
■ Morever, modern day reveals that free trade is widely accepted
in many nation-states additionally subduing protectionism in
other nations thus saving them from the effects of sanctions,
boundary tax and quotas which cause trade wars.
■ Furthermore, change is another factor, the human race
increases thus the younger generation supersedes the elders.
Whereas, there’s a shift in production procedures where new
processes dominates thus, with the earth is shifting in vital
aspects of global financial trade are changing as well.
 References
■ Bang, J.(2021). What io know about Trump’s Trade Wars Image. Retrieved from
https://www.thebalance.com/trade-wars-definition-how-it-affects-you-4159973
■ Ludema, R., D. (2018). The Real Donald Trump: A Free Trader in Protectionist Clothing or Vice
Versa?. Retrieved from https://blogs.sussex.ac.uk/uktpo/2018/11/07/
the-real-donald-trump-a-free-trader-in-protectionist-clothing-or-vice-versa/