Arguments In Favour Of Trade Restrictions

Question 1

Infant industries

Answer 1

Trade barriers protect new industries developing , can grow and full gain EOS

E.g phone market in brazil placed tariffs on apple to promote sales

Question 2

Strategic trade theory

Answer 2

Government can choose industries of special strategic importance protect them while they build competitive advantage

Question 3

Sunset industries

Answer 3

Protection of older declining industries in advanced industrial economies from foreign competition minimising structural employment

E.g steel industry

Question 4

Demerit goods

Answer 4

Trade restrictions reduce importation of demerit goods thus protecting countries from overproduction

Question 5

Diversity

Answer 5

If countries focus to heavily on production go one good this can leave them more vunreble to changes in market conditions

Trade barriers ensure a country doesn’t have all of its eggs in one basket

E.g Venezuela 95 % of exports are petroleum

Question 6

Anti dumping

Answer 6

Used to protect country from dumping

Protects domestic industries from unfair competition caused by foreign companies selling at low prices

Question 7

Self sufficiency

Answer 7

Important for country heading to war , countries can be vunreble to dependence on other countries especially in energy markets

E.g Russia sources natural gas to EU
Price increase was around 850% between 2021 and 2022

Question 8

Employment

Answer 8

Restrictions are required to prevent MNCs from offshoring production

If not welfare loses from unemployment

Question 9

Retaliation

Answer 9

Risk of retaliation key argument against use of tarrifs

May persuade them to free up their markets