- Protectionism
- Protectionism is government policy to reduce or block imports, often to shield domestic producers and workers from foreign competition.
- Free trade
- Free trade is trade in which countries allow each other's imports without tariffs, quotas or other barriers set by government.
Forms of protectionism
Can you name the three forms of protectionism?
Each makes imports dearer or scarcer, but each works on something different.
A tariff is a tax that a government imposes on imported goods and services, which makes imports more expensive for consumers.
Can you think of an example?
A 10 per cent tariff on imported cheese adds £1 to a £10 wheel of French brie before it reaches the shop. The tariff works through the price, and the £1 goes to the government.
An import quota is a numerical limit on the quantity of a product that a country can import.
Can you think of an example?
A cap of 5,000 tonnes a year on imported lamb is a quota. Once the cap is reached, no more lamb comes in at any price, and the government collects nothing on what does.
A non-tariff barrier is any rule, regulation, inspection or paperwork a nation draws up to make importing products more costly or difficult.
Can you think of an example?
A rule that every lorry of imported meat must wait at the port for a vet's inspection is a non-tariff barrier. Nothing is taxed or counted, but each delay adds to the cost of importing.