Question

Name and define three policy tools for enacting protectionism.

Short answer

Tariffs, quotas, non-tariff barriers

Step-by-step solution

Step 1. Introduction

Protectionism refers to a policy by the government to restrict international trade through the imposition of trade barriers. Different arguments are presented to justify protectionist policies. Protectionist policies are adopted by a government to protect domestic industries from foreign competition.

Step 2. Explanation 

Different policy tools are used b the government to restrict trade. These tools have been discussed below:

• Tariffs: It is a tax imposed on the import of products in the domestic market. Tariffs increase the cost for producers, thus, further raising the price of imports. This causes the quantity demanded of imports to decline.
• Quotas: It refers to quantitative limits imposed on the import of products in the domestic market. A quota limits the physical quantity of products that can be imported.
• Non-tariff barriers: These refer to other restrictions such as paperwork, rules, regulations, and standards that make it costly to import products into the domestic market.