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International Economics 17th Edition

International Economics (17th Edition)

Book Edition17th Edition
Author(s)Carbaugh
ISBN9781337558938
PublisherCengage
SubjectEconomics
Types of Tariffs
International Trade Application
Postponing Import Tariffs
International Trade Application
Examples of U.S. Tariffs
International Trade Application
Would a Tariff Wall Really Protect U.S. Jobs?
International Trade Application
Chapter 4, Types of Tariffs, International Trade Application, Exercise 01
Page 117

What do you think? Concerning international trade policy, why do countries sometimes become more protectionist as their economies fall into recession?

Here is a tip:

Protectionist policies are the policies that restrict international trade by putting up trade barriers.

Explanation

During recession countries face economic downturns in terms of fewer jobs, decreased production of goods, reduced economic opportunities leading to lower economic growth. In such a situation, it becomes very difficult for countries to  compete with other countries in international trade. Therefore, to reduce the burden of international competition on domestic economic agents, countries indulge in protectionist policies such as imposing tariffs on imports. 

With reduced or no imports, the domestic demand would have to be satisfied via domestic production. This provides some scope for domestic revival. Hence using protectionist policies is done by governments for reviving the country from recession.

Verified Answer

Countries become more protectionist during recessions to safeguard the economic interest of the economy and economic agents, by protecting the domestic producers against foreign competition.

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