Question

Name and define three policy tools for enacting protectionism.

Short answer

Tariff and non-tariff barriers, quotas.

Step-by-step solution

Step1. Introduction

With the increased globalization, protectionist policies are necessary. Protectionism essentially means the reduction in the volume of foreign trade and putting a cap and check on it.

Step2. Explanation

Protectionism involves 3 major policy methods:

1. Tariff barriers

2. Non-tariff barriers

3. Quota restrictions

Step3. Definition

1. Tariff barriers: Taxes are imposed on the products and services which are imported. These taxes hence make the imports costlier, thus leading to a fall in demand for imports and rise for the domestic goods and services.

2. Non-tariff barriers: All other barriers other than the taxes and quotas fall under this category. Increased paper-work and licensing, inspections and checks, rules and regulations, all fall under this head. They discourage the importers as it becomes very difficult, expensive and tiring to follow it all.

3. Import quotas and restrictions: Limiting numerically the quantity that can be imported refers to import quotas. It is done again to protect the demand of domestic players.