As a group, the world's economists are not known for consensus on most subjects. But they are nearly unanimous on one thing: Trade protectionism harms economic growth. Although global trends have moved toward freer trade, most countries continue to use a variety of protectionist measures, such as tariffs and import quotas, to protect domestic industries from foreign competitors. Although most economists prefer free trade, they acknowledge that protectionism benefits some players in the world economy.
Pro: Protect Domestic Jobs
This is one of the leading arguments for protectionism; namely, that doing so protects domestic industries and their workers' jobs. Labor unions and domestic industries often appeal to patriotism to marshal support for protectionist policies. "Buy American" has been a popular rallying cry, such as among the American auto industry when the Big Three automakers faced stiff competition from Japanese imports. Economists concede that free trade imposes costs and burdens on some industries and workers in the short run, but that in the long term, it is far more beneficial than protectionism, which they believe helps only a select few at the expense of the larger economy and society.
Pro: National Security
Advocates of protectionism contend that excessive free trade compromises national security by making nations too dependent on goods from other countries. They will then argue for protection of industries deemed vital to national security, such as steel and oil. Rising oil prices, for example, led to calls for more domestic oil production and less reliance on imports from other countries, such as those in the Middle East.
Pro: Infant Industries
Governments often justify protectionist policies by claiming that such policies are necessary to help industries that are in their infancy to develop. The validity of this argument, however, is undermined by the tendency for such policies to become permanent as the aided industry grows dependent on the support and even lobbies government officials to keep protectionist measures in place.
Con: Higher Prices, Less Selection
Protectionism restricts competition by limiting the availability of foreign goods, forcing consumers to buy more expensive domestic products. The costs of tariffs and other protectionist barriers are passed on to consumers in the form of higher prices for foreign goods. Free trade, in contrast, forces more competition among producers around the world, which lowers prices and increases the diversity of goods.
Con: Slower Economic Growth
Economists contend that protectionism limits economic growth by restricting the markets in which goods are available. They caution that a country that restricts goods from other countries may find its products similarly restricted, which slows growth by making it harder for industries to export their products.
Con: Global Tensions
When the government of one nation restricts another countries' imports through tariffs, import quotas, or other protectionist policies, the second nation may retaliate with similar actions against goods from the first country. Actions to restrict trade with other nations can develop into a "trade war," as nations continually act against each other's goods. In extreme cases, these tensions can escalate into armed conflict.
