Protectionism Flashcards
What is the purpose of protectionism?
Protectionism seeks to disrupt ‘free trade’ by creating barriers for trading, in order to protect the interest of domestic firms from the threat of foreign rivals.
What motivates protectionisms?
-Exporting a good to a market well below domestic market prices.
-To reduce a trade deficit.
-To protect jobs, key industries.
-To increase govt. revenue through tariffs.
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What is dumping?
This is when a company exports a good to another country and sells it below the price it would normally would in its home markets (where the good is from) it is said to be dumping the good.
What is an example of dumping?
China produces surplus steel from state funded zombie companies and dumps steel in the EU. This has caused the U.S. steel industry in the UK to go out of business.
