Protectionism

Trade Barriers

Governments implement trade barriers as part of protectionist policies. Barriers include:

1. Tariffs
2. Embargos
3. Quotas
4. Subsidies

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5. Tariffs**:** A tariff is a tax imposed on imported goods. This increases the price of the import, discouraging its consumption and encouraging consumers to buy domestically produced goods instead.

• Example: In 2018, Donald Trump imposed a 25% tariff on all steel imports to protect US manufacturing.

6. Embargos: An embargo is a total ban on importing goods from a particular country. It can serve as a protest or punishment for political, economic, or environmental reasons.

• Example: Ireland faced a 15-year embargo on exporting beef to the USA, which was lifted in 2015.

7. Quotas: A quota sets a limit on the number of units of a specific good that can be imported. Limiting imports helps increase the sale of domestically produced goods.

• Example: In 2018, the UK implemented quotas to limit the import of steel from non-EU countries to protect the domestic steel industry

8. Subsidies: Subsidies are financial grants and payments from governments to domestic firms to help with operational costs. They lower production costs, making domestic goods more competitive against imports.

• Example: During Covid-19, Lufthansa received billions in state aid to cover its costs. Foreign companies, like Ryanair, sued the German government for these subisidies as they were unable to compete.