Arguments Against Protectionism

Argument against protectionist measures

In the United States, it is not free trade that has led to the decline in wages as result of less demand for low skilled workers it is the capital investments in labor-saving technologies like robotics and increasing worker productivity that have led to the large majority of the factory job losses (American Institute of Enterprise 2017). Manufacturing is growing and the sector continues to remain a large and important part of the U.S. economy, employment in the manufacturing sector has deteriorated for some time primarily due to growth in productivity in manufacturing production process (ibid). Although trade is one of the factors that has contributed to change in the manufacturing sector in terms of

Protectionism can also have a negative impact on the growth of the national economy, for instance economists argue that imposing trade barriers on imports from other countries would harm the exporting competing industrial sectors in US as trading partners would also impose protectionist measures to balance the returns from trade which will result in the decrease of US

In the case of protectionism, the winners are domestic producers and unskilled workers in the import competing industries and the losers are the consumers. In the case of free trade the winners are the consumers and export industries and the losers are domestic producers in import competing industries and unskilled workers. An important point to be noted here is that the workers who work in protected industries are also consumers in that economy and will be affected by the higher prices of goods and reduction in trade. Since trade benefits consumers in terms of reduced prices of goods, the workers who earn a low income due to a decline in the aggregate demand for domestically produced goods in the import competing industries will also be relatively well off. This shows us that both free trade and protectionism have pros and cons and have different effects on different factors of production in an economy but the bottom line is the benefits from free trade exceed the benefits of protectionism and hence we can argue that the threat of unemployment or decline in real wages does not provide a valid argument for governments to employ protectionist