- Define and explain Protectionism Explained in your own words
- Use key terms such as tariff accurately
- Apply what you have learned to new examples and questions
- Avoid the common mistakes learners make with this topic
This lesson focuses on Protectionism Explained: examine tariffs, quotas and the arguments for and against them.
Examine tariffs, quotas and the arguments for and against them.
Key ideas
Protectionism versus free trade
Tariffs and quotas shield domestic jobs and infant industries and can protect national security, but they raise consumer prices, invite retaliation and shelter inefficiency. Globalisation has lifted millions from poverty through trade-led growth, yet created losers in declining industries — hence demands for retraining and compensation.
The gains from trade
Ricardo showed that if Portugal gives up less wine to make cloth than England does, both gain by specialising and trading — even if Portugal is better at both. Trade enlarges both nations' consumption possibilities, though the gains may be unevenly shared within each country.
Key term — tariff: A tax on imports that raises their price, protecting domestic producers but hurting consumers.
Give one argument for and one against tariffs.
For: protects domestic jobs and infant industries. Against: raises consumer prices and risks retaliation.
Answer: For: protects domestic jobs and infant industries. Against: raises consumer prices and risks retaliation.
- Thinking exports are good and imports bad Imports give consumers choice and lower prices and supply inputs for exporters — a surplus is not automatically better than a deficit.
- Confusing depreciation with devaluation Depreciation is a market-driven fall in a floating currency; devaluation is a deliberate cut in a fixed exchange rate.
Practice
A physical limit on the quantity of a good that may be imported.
Countries gain by specialising in goods they produce at the lowest opportunity cost, then trading.
$63.50 (50 × 1.27).
They become cheaper in foreign currency, boosting demand for them.
Quick check
Which of these best defines "tariff"?
Why might globalisation increase inequality within a country?
- Protectionism Explained: examine tariffs, quotas and the arguments for and against them.
- Protectionism versus free trade: Tariffs and quotas shield domestic jobs and infant industries and can protect national security, but they raise consumer prices, invite retaliation and shelter inefficiency.
- comparative advantage: Ricardo's principle that countries gain by specialising in what they produce at the lowest opportunity cost — even if another country is more efficient at everything.
- Watch out for: thinking exports are good and imports bad