• Economy -> International Trade and Globalization

• 0 Comment

What is the history of protectionism in international trade?

Betha Reaveley

Oh, protectionism in international trade, you ask? Buckle up, my friend, because the history of this topic is quite a rollercoaster ride. Let's dive in!

First things first, what even is protectionism in international trade? Simply put, it's the act of governments implementing policies to protect their own domestic industries from foreign competition. This can come in the form of tariffs, quotas, subsidies, and other types of restrictions on imports.

Now, back in the day (and by that, I mean the 18th and 19th centuries), protectionism was all the rage. Countries like Great Britain and the United States would slap tariffs on foreign goods left and right to protect their own industries. It was like a game of thrones, but with trade instead of dragons.

However, this all changed in the 20th century when the world started to become more interconnected. The Great Depression of the 1930s led to a spike in protectionist policies as countries tried to shield themselves from the economic downturn. But this only made things worse, as it led to a vicious cycle of retaliation where one country's protectionist policies would be met with another country's retaliation, and so on.

After World War II, the international community realized that this protectionist mindset wasn't doing anyone any favors. So, they established the General Agreement on Tariffs and Trade (GATT) in 1947, which aimed to reduce trade barriers and promote free trade. Over time, more and more countries joined GATT and eventually, it evolved into the World Trade Organization (WTO) in 1995.

Fast forward to today, and protectionism is once again on the rise. The 2008 financial crisis, as well as the perceived threat of foreign competition, has led to a resurgence in protectionist policies. Countries like the United States and China have been engaging in a trade war, imposing tariffs on each other's goods and causing a great deal of economic uncertainty.

So, what's the moral of the story? Protectionism may seem appealing, but history has shown us that it ultimately hurts more than it helps. Sure, it might protect domestic industries in the short-term, but it results in higher prices for consumers, less innovation, and an overall reduction in international cooperation. As the saying goes, "when goods don't cross borders, soldiers will." So, let's all work together towards a more open and interconnected world.