Protectionism or free trade restriction helps to counteract the rise in unemployment and social tension. Cyclical development of a market economy requires government measures to restrict access to the domestic market for foreign goods and services in the interest of a speedy overcoming of the temporary reduction in demand. However, no regulation of trade is not able to increase the scale of production so we cannot say that restricting trade with foreign countries is a good way to create more jobs in the US, “trade liberalization should reduce wage inequality” (Baker 430). The level of trade restrictions can be a serious problem holding back the development of the United States.
Protectionism turns into high consumer prices. In an open economy every consumer benefits from competition between imported and domestic products, which leads to lower prices (Bergsten 105). Trade restrictions lead to total loss of society as a whole, support for enterprises with low competitiveness, reduce economic efficiency through the use of relatively more expensive factors of production (Mansfield, Mutz 425). The fees allow local producers set higher prices than they should have been because they did not have to compete with cheaper imported goods. Trade tariffs weaken competition and destroy the incentive for US companies to become more efficient, delaying thus economic progress. In this situation, consumers lose additional benefits, which gives them an active international trade. In turn, protective measures against the manufacturers will inevitably lead to the same effects on the other hand. As a result, these "wars" will affect Americans.
Free trade is not beneficial primarily to those sectors of the US economy which are or may be strategic, but cannot withstand international competition. These industries include clothing industry, ceramic tile, bags and sugar production. In these industries, the original duties were imposed to protect US firms and their employees from external competitors offering lower prices. Such jobs in the long term are always under threat, because sooner or later the state has run out of money to subsidize them. Also trade restrictions are beneficial for large American national monopolies. “Vested interests in protectionist sectors can be tenacious pressure groups with preferred access to policy makers” (Milner, Kubota 2). Redistribution of markets in this case by means of a complex system of state-monopoly measures, controlling and regulating foreign trade and industrial activities. If American policy will be aimed at supporting national suppliers of high-tech that it will not allow foreigners to enter into key sectors such as banking, telecommunications, law and insurance. This policy deprives talented entrepreneurs and the country as a whole the possibility to take advantage of the international division of labor and to focus on the production of those goods that it does better than others. Successful businesses and industries rather quickly faced with the saturation of solvent demand in the country and the need to enter foreign markets.
Trade restrictive measures in conjunction with the marked increase in anti-trade rhetoric may have a further negative impact on trade flows with consequences for economic growth and job creation. The United States does not directly face the negative consequences of Trump’s protectionist course although they certainly will. World history has shown that protectionism always leads to a slowdown in economic growth. Also it is possible to mention one more negative aspect of protectionism, which is associated with the creation of the atmosphere that needed to protectionist actions, but in fact it may be contrary to the interests of society as a whole. This situation occurs when initiating the use of protectionist instruments are the group of entrepreneurs, oligarchic groups or consumer groups. Such companies can try to eliminate commercial rivals.
Works Cited
Baker, Andy. "Why is trade reform so popular in Latin America?: A consumption-based theory of trade policy preferences." World Politics 55.3 (2003): 423-455. Print.
Bergsten, C. Fred. "Globalizing free trade." Foreign Affairs (1996): 105-120. Print.
Mansfield, Edward D., Mutz, Diana. "Support for free trade: Self-interest, sociotropic politics, and out-group anxiety." International Organization 63.03 (2009): 425-457. Print.
Milner, Helen V., Kubota, Keiko. "Why the move to free trade? Democracy and trade policy in the developing countries." International organization 59.01 (2005): 107-143. Print.
