4.1.4 Protectionism

What is Protectionism

The attempt to restrict Imports and increase Exports

What is Protectionism the opposite of

Trade Liberalisation

What are the 3 main forms of trade barriers?

Tariffs

Quotas

Legislation and Regulation

What method of Protectionism adds taxes to imports?

Tariffs

What is a Tariff?

Import Taxes

2 Reasons why Tariffs good for Domestic Companys

- Less foreign imports competition

- Domestic Products seem cheaper

A drawback of Tariffs on consumers

- Higher prices on imported goods

What are quotas

A limit on the volume of a product that can be imported in a year

What method of protectionism limits the amount of imports in a year?

Quotas

What effect do quotas have on the price of imported goods

- Pushes them up due to limited supply

2 Benefits of import Quotas on domestic businesses and the unemployed

- Less competition

- Creates more jobs to make up for the lack of imports

1 drawbacks of Quotas on government revenue

No extra revenue from import tax

Drawback of Quotas on domestic consumers

Higher price on imported goods

How can increased government legislation Reduce imports?

- Increased safety regulations could make a product all of a sudden become illegal

What are Domestic Subsidies?

Government paying money to a domestic firm to improve their competitiveness

What do domestic subsidies do allow a domestic firm to do to be more price competitive?

Reduce prices

Benefit to demand of Domestic Subsidies

- Helps to stimulate demand

A Drawback to everyone of Domestic Subsidies

Taxes are increased to pay for these taxes