Question

President Trump and his administration clearly signal a shift in US global economic policies that suggest a more protectionist approach.

Do you agree or disagree with such an approach? In other words, is the increased protectionism in US global economic policy (both in rhetoric and action) useful and beneficial? What can be the advantages and disadvantages of such a shift?

Answer 1

US is the largest economy on this planet and is now moving towards protectionist stance in the international forms of trade. There have been many approaches that are thought to be looked into by the US president such as the NAFTA trade deal as well as providing an ultimatum to China in with 45% tax .

Protectionist policies could be defined as policies that woukd be providing unfair advantages to home industries in comparison to that of the international competition. Protectionism is advantageous when a person deals with infant industries or when free trade has to be finished. As a result of free trade, everything becomes cheap, resulting in an improvement of the product quality so that everyone would directly benefit. This is because, there is different strength of production in different companies due to technological expertise or cheap labor or depending on the availability of resources. When every country would focus on the things that they do best, the products would be better and of cheaper quality. This in turn is traded within countries so that the consumer is benefited. As a result of free trade, there would be income in the poorer countries an an expansion of market share.

protectionism is beneficial when most of the trade is shifted to one part of the country. As a result, there is precious time that a company would invest in the production facilities, gaining trust of the local consumers before opening of the national market to the international competition. This can partly be attributed to the growth of Japanese, South Korean as well as Chinese industries. Also, in favour of protectionism, another argument is that if the competitors are shielding their industries, we should do it as well.

Hence, protectionism has its own benefits. But, the policies that have been proposed by the trump government, there would be substantial price increase in the US, resulting in reduction of the buying power of American consumers and reduction of inward investments. Also, there is a fear of retaliation of the trading partners from US. There is a huge threat posed about inward investment due to the current policies. Hence, with the current proposed policies, protectionism is not beneficial.