What is Protectionism?

According to Wikipedia, trade protection (trade protectionism) is the imposition of certain standards in fields such as quality, hygiene, safety, labor, environment, origin, etc., or the imposition of high import taxes on certain imported goods to protect the domestic producers of similar goods (or services) in a certain country.

Theoretically, trade protection provides short-term benefits to domestic producers, ensuring social objectives such as securing employment for certain groups of workers. Its downside is that it gives domestic producers the opportunity to speculate on the selling prices (or service fees) at the most favorable levels for them or fails to implement measures to improve quality and reduce product costs. This brings harm to consumers in the long-term goals.

There are many perspectives surrounding the issue of protectionism policies, typically the following two:

- First, countries focus on producing and protecting the fields in which they have strengths. For those fields that are not competitive currently or in the future, they will not continue to strongly protect but will protect these fields mainly through tariff tools;- Second, countries focus on protecting the fields in which they do not have strengths by subsidizing, setting up tariff barriers, technical barriers, etc. The fields that already have strengths will continue to be protected but only at a defensive level.

To implement protectionism policies, countries will introduce various trade protection measures such as tariff barriers, anti-dumping taxes, etc.

The benefits of trade protection can be seen as follows:

- Reduces the competitiveness of imported goods;- Protects domestic producers; helps them strengthen their position in the domestic market;- Helps producers increase competitiveness to capture foreign markets;- Helps regulate the national balance of payments, appropriately use each country's foreign currency payment sources.

However, alongside these advantages, the following disadvantages must also be noted:

- Damages the development process of international trade, causing economic isolation of a country in the trend of globalization;- Causes reliance and stagnation among domestic businesses, resulting in the stronger the protection, the less flexible the competitiveness of strategic industries, investment, and business activities being less effective;- Causes a lack of diversity in designs, styles, product quality, etc., and makes goods more expensive compared to trade liberalization, harming consumers.

Given these pros and cons, protectionism is always a contentious and difficult choice for each nation. When implementing protectionism policies, the country will inevitably face pressure from both its own and other countries. Therefore, protectionism remains a challenging question for countries around the world as no one can foresee the potential trade wars that may occur.

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