Legal Definitions - Protectionism

Protectionism is an economic idea that suggests using taxes and other government restrictions to safeguard local businesses from foreign competition. This approach may arise from different reasons, such as nationalistic pride or concerns about a worldwide competition that could harm all workers involved. The opposite of protectionism is free trade, which advocates for open markets and unrestricted commerce between countries.

• Imposing high tariffs on imported goods to make them more expensive and less competitive with local products.
• Limiting the number of foreign companies that can operate in a country to reduce their impact on local businesses.
• Subsidizing domestic industries to make them more competitive and able to lower their prices.

These examples illustrate how protectionism can create barriers to trade and limit the choices and opportunities available to consumers. While protectionism may benefit some industries and workers in the short term, it can also lead to higher prices, lower quality, and reduced innovation in the long run. Moreover, protectionism can trigger retaliation from other countries, which may harm the exports and jobs of the country that started the protectionist measures.