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Economic policy of restraining trade between states through government regulations / From Wikipedia, the free encyclopedia

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Protectionism, sometimes referred to as trade protectionism, is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations. Proponents argue that protectionist policies shield the producers, businesses, and workers of the import-competing sector in the country from foreign competitors and raise government revenue. Opponents argue that protectionist policies reduce trade, and adversely affect consumers in general (by raising the cost of imported goods) as well as the producers and workers in export sectors, both in the country implementing protectionist policies and in the countries against which the protections are implemented.[1]

Political poster by the British Liberal Party presenting their view of the differences between an economy based on free trade versus one based on protectionism. The free trade shop is shown as full of customers due to its low prices. The shop based on protectionism shows higher prices and a lack of customers, and with animosity between the business owner and the regulator.
Anti-free trade postcard from 1910

Protectionism has been advocated mainly by parties that hold economic nationalist[lower-alpha 1] positions, while economically liberal[lower-alpha 2] political parties generally support free trade.[2][3][4][5][6]

There is a consensus among economists that protectionism has a negative effect on economic growth and economic welfare,[7][8][9][10] while free trade and the reduction of trade barriers have a significantly positive effect on economic growth.[8][11][12][13][14][15] Some scholars, such as Douglas Irwin, have implicated protectionism as the cause of some economic crises, most notably the Great Depression.[16] Although trade liberalization can sometimes result in large and unequally distributed losses and gains, and can, in the short run, cause significant economic dislocation of workers in import-competing sectors,[17][18] free trade often lowers the costs of goods and services for both producers and consumers.[19]

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