Hunter Pinion

The Effect of Protectionism on the U.S. Economy Free trade on a global scale is referred to as Globalization. This occurs when a nation imports and exports goods to other countries without imposing barriers such as tariffs or subsidies. Tariffs are imposed by way of taxation of a specific imported good in order to protect the sale of similar domestic goods, while subsidies are government funds paid to domestic producers so that they can sell the product at a price below marginal cost. Sometimes the government will outright ban a specific foreign product! Each of these policies keep foreign producers from effectively selling their products to the U.S. market because most consumers will buy whatever good or product is cheapest. Some Americans believe that these tariffs and subsidies are beneficial to the U.S. economy because they help to “save American jobs” and these ideals are referred to as protectionism. Those in favor of this protectionism agenda have made several arguments one of which is saving American jobs. While saving American jobs is a nice thought, this protectionist agenda has many adverse effects that contradict this very idea. Take for example the American steel industry which has to compete on a global level in order to maintain its grip on the economy. Other countries are able to produce steel at a price cheaper than what it costs in America so in turn they can sell their product at a lower price. Of course any consumer in need of steel would purchase the foreign good if that meant the price would decrease. In order to prevent this from occurring the government applies tariffs on imported steel which in turn “saves American jobs” and prevents the entire steel producing industry from going under. Another argument those in favor of protectionism use is that without these tariffs the American steel industry would collapse