External Environments Replies

1. Key Term and Why You Are Interested in It

The key term I chose was protectionism for my research. The concept of protectionism peaked my interest because there is a push for buy locally and buy products made in the USA. There tends to be a great sense of pride in supporting homegrown companies. While local businesses may benefit from this campaign, it is not always the best for the consumer that may be able to get products cheaper through global commerce. Protectionism can be seen as the opposite of free trade and can be politically driven. I have been a proponent of focusing on local businesses but I am interested in discovering how it looks from a global perspective.

2. Explanation of the Key Term

The concept of protectionism can be seen as a way to restrict trade between nations. It is in opposition to free trade where there are no barriers. These restrictions may be in the form of high tariffs on imported goods, government regulations on imports, regulations on other nations owning domestic assets, and anti-dumping laws. Protectionism can be used as a means to curtail foreign influence in a nation by controlling foreign direct investment (Satterlee, 2019). China has used these means throughout history to keep out the western culture. Protectionism from an economic perspective can be used to elevate taxes on domestic products by receiving revenue from tariffs on imported products. Some may see this as discouraging competition and hurting domestic consumers instead of helping them (Satterlee, 2019).

3. Major Article Summary

The article that was found for the key term research discusses the history of protectionism in US trade policy. The United States has always had protectionist trade policies and laws in place throughout history. Polices for protectionism can be traced back to mercantilism which the idea that government should manage international trade. Governments regulate trade by balancing trade, protecting domestic production through discouraging imports, and providing subsidies to domestic businesses (Williams, 2019). The premise was to increase a nations wealth through trade surplus. The United States were focused mainly on domestic production in the early twentieth century. As the economy grew, they began to international trade became more prevalent. The US was concerned about protecting the economy during the Great Depression closed off the economy with the passing of the Smoot-Hawley Act in 1930. This was a strong protectionist move that increased tariffs on imports substantially. The United States was one of the leaders in promoting free trade polices after WWII. Global leaders pushed international cooperation in trade because of the effects of protectionism during the global depression. The US still kept some protectionist laws. Protectionism does have its benefits; it can redistribute wealth, curtail methods of unfair trade, lower trade deficits, protect domestic jobs, and help emerging industries. However, critics attribute these practices as detrimental to the economy. Especially through the example of the Smoot-Hawley Act in which many believe worsened the Great Depression. The push in the Trump presidency in recent years have brought back protectionist ideas through “America first” campaigns. However, those protectionism policies in trade have always been part of the US trade polices (Williams, 2019).

4. Discussion

1. The article chosen focuses on the practical application of protectionism and how it has been used in the United States throughout history. The textbook focuses on how China has used protectionism to limit western influences (Satterlee, 2019). While the article explains how the US has been a proponent of free trade since WWII but has still implemented many protectionist policies. These polices have worked in some ways and have been detrimental in others. The glaring example is how the Smoot-Hawley Act hurt the US economy during the Great Depression. The tariffs placed on imports were very high and added to the global economic crises. The US has also used protectionist policies to push domestic products and to subsidize domestic companies. The US has a blended philosophy of free trade and protectionism (Williams, 2019).

2. The other articles researched focus on how protectionism takes place and the economies are affected by these policies. China has always regulated their trade polices to keep foreign influence out. However, since the Covid-19 pandemic other countries have placed more tariffs on imports from China in response (Wang, 2021). The United State’s policy of “Buy America First” has resulted in higher tariffs placed on imports and other countries retaliating by putting levies on US products (Chunding & Whalley, 2021). Another large economy that has practiced protectionism is Australia. They have been one of the largest protected economies next to New Zealand for much of the 20th century (Anderson, 2020). The last article explains how the process of protectionism is very political and how the economy is affected (van Aaken, 2029). The political impact is seen throughout the other articles.

References

Anderson, K. (2020), TRADE PROTECTIONISM IN AUSTRALIA: ITS GROWTH AND DISMANTLING. Journal of Economic Surveys, 34: 1044-1067.  https://doi-org.ezproxy.liberty.edu/10.1111/joes.12388

Chunding Li, John Whalley (2021).Trade protectionism and US manufacturing employment, Economic Modelling,Volume 96, Pages 353-361, ISSN 0264-9993.  https://doi.org/10.1016/j.econmod.2020.03.017.

Satterlee, B. (2019). International Business with Biblical Worldview. McGraw-Hill. ISBN 13: 978-1-260-77143-5. 

van Aaken. (2019). Beyond Rational Choice: International Trade Law and The Behavioral Political Economy of Protectionism. Journal of International Economic Law., 22(4), 601–628. https://doi.org/10.1093/jiel/jgz034

Wang, F., & Wu, M. (2021). The Impacts of COVID-19 on China’s Economy and Energy in the Context of Trade Protectionism. International Journal of Environmental Research and Public Health, 18(23), 12768.  http://dx.doi.org/10.3390/ijerph182312768

Williams, N. (2019). THE RESILIENCE OF PROTECTIONISM IN U.S. TRADE POLICY. Boston University Law Review, 99(2), 683-719.  http://ezproxy.liberty.edu/login?qurl=https%3A%2F%2Fwww.proquest.com%2Fscholarly-journals%2Fresilience-protectionism-u-s-trade-policy%2Fdocview%2F2215508507%2Fse-2%3Faccountid=12085