Protectionism Flashcards
What is protectionism?
Any attempt by a country to impose restrictions on trade in goods and services
What are tariffs?
A tax or duty that raises the price of imported products
What is a quota?
An annual restriction on the amount of a particular good that can be imported
What are subsidies?
A payment to encourage domestic production by lowering their costs
What are the benefits of protectionism?
· Helps new industries establish themselves and achieving economies of scale
· Protects jobs, skills and capabilities in key industries to a country
· Protection against import dumping (a form of predatory pricing which can damage domestic industries)
What are the drawbacks of protectionism?
· Higher prices for consumers
· Retaliation from other countries
· Extra costs for exporters
