Protectionism Globalization is the tendency of businesses, technologies, or philosophies to spread throughout the world, or the process of making this happen. The global economy is sometimes referred to as a globality, characterized as a totally interconnected marketplace, unhampered by time zones or national boundaries

Globalization, Trade and Poverty

Trade Deficit (negative trade balance) How could the US reduce its trade deficit? Tariffs, quotas, and other protectionist measures that encourage consumers to buy American rather than imported goods

EOC study guide Globalization #3 Should we Stop trading? Protectionism is the use of trade barriers to protect a nation's industries from foreign competition they can also be used to “punish” a foreign government

Tariffs Lead to Higher Prices EOC study guide Globalization #3a Tariff—a tax on imported goods Tariffs negatively affect trade Suppose Americans buy golf balls made in Japan (imports) and the US government places a $1 tariff on each golf ball What will happen as a result of the tariff? Americans will buy fewer Japanese golf balls Who benefits from the tariff? The domestic producers of the good benefit!

Trade Barriers as protectionism EOC study guide Globalization #3 b Trade Barriers as protectionism Export subsidies—a Government payment to firms in its own country allowing the firms to sell their goods at lower prices

Trade Barriers as protectionism EOC study guide Globalization #3c Quota—a limit on the amount of a good that can be imported Quotas effect trade Suppose Japan is sending 300,000 cars into the US each year and the US decides to set a quota of 200,000 cars from Japan each year What is the effect of the quota? Fewer Americans can buy Japanese cars Who benefits from a quota? The domestic produces of the good on which the quota is placed

Trade Barriers as protectionism Why is there corn in my coke? EOC study guide Globalization #3c

Why Does the Government Do It? If trade restriction benefit domestic producers at the cost of the consumers why does the government do it? Politicians generally respond to the most vocal interests—they hear from those people who want the tariffs (the producers), but not from those people who are against them (the consumers) It benefits relatively few producers with costs spread over relatively many consumers

Protectionism: Arguments for Trade Restrictions pages 409-412 Break into groups of 2-3. Sign up for a side/argument. Present finding to class. The National-Defense Argument Explain argument- Criticism-- The Infant-Industry Argument The Antidumping Argument The Low-Foreign-Wages Argument The Tit-for-Tat Argument

Free trade: Arguments Against Trade Restrictions When one country restricts imports, its trading partner my retaliate by imposing its own restriction against the first country Snoot-Hawley Tariff of 1930 US increased its average tariff on all products to 50% It’s trading partners imposed higher tariffs on US goods The decreased international trade deepened the worldwide depression

Free trade: Arguments Against Trade Restrictions Chicken Tariff of 1963 European Economic Community trade organization imposed a large tariff on frozen chickens from the US American chicken exports were cut in half US retaliated by increasing tariffs on expensive brandies from France, potato starch from Holland, and light trucks from Germany Pasta Tariff of 1985 US imposed tariffs on pasta from the European Economic Community EEC retaliated by increasing tariffs on lemons and walnuts from the US

Trade Barriers as Foreign Policy Sanctions are domestic penalties applied by one country (or group of countries) on another country may include trade barriers and restrictions on financial transactions EOC study guide Globalization #4a

In Nov. 2015 Russia Sanctioned Turkey for Downing their Airplane

Trade Barriers as Foreign Policy Embargoes are the partial or complete prohibition of commerce and trade with a particular country. As of May 2013, the United States has sanctions against: Burma, since 1997 Cuba, since 1962 Iran, since 1979 Libya, since 2011 North Korea, since 1950 Sudan, since 2002 Syria, since 1986 EOC study guide Globalization #4b

Protectionism reduces Outsourcing Outsourcing is when a company moves jobs to foreign countries where labor is cheaper Cheaper labor lowers production costs and allow companies to make larger profits and sell their goods for a lower price Investopedia video clip https://www.upwork.com/ EOC study guide Globalization #14 Are cheaper Iphones bad for America?

Sanction, embargo, Subsidy, tariff, quota quiz Sanction, embargo, Subsidy, tariff, quota quiz! Get out a piece of paper and number it #1-7

subsidy, tariff, quota, Sanction or Embargo? A tax of 15% makes jewelry from Mexico more expensive than jewelry made in the United States. #1

subsidy, tariff, quota, Sanction or Embargo? In 1979, a group of radical students in Tehran seized the American embassy and took the people inside hostage. President Carter issued Executive Order 12170 freezing about $12 billion in Iranian assets, including bank deposits, gold and other properties. #2

subsidy, tariff, quota, Sanction or Embargo? Indiana’s government will give Carrier a special tax break if they agree to keeping 2,000 jobs in Huntington instead of moving them to Mexico. #3

Korea may export only 15,000 automobiles a year to the United States. subsidy, tariff, quota, Sanction or Embargo? Korea may export only 15,000 automobiles a year to the United States. #4

subsidy, tariff, quota, Sanction or Embargo? President George W. Bush placed a temporary 8-30% tax on imported steel on March 5, 2002. The taxes were lifted by Bush on December 4, 2003. #5

subsidy, tariff, quota, Sanction or Embargo? "There are no Somali warlords that threaten peace and stability in Somalia," the deputy UN ambassador for Somalia said. "They are normal citizens now, members of parliament.” Somalia wants help strengthening its poorly equipped and ill-disciplined military that is more of a loosely affiliated umbrella group of rival militias than a cohesive fighting force. What needs to end? #6

subsidy, tariff, quota, Sanction or Embargo? A new textile firm asks its government to provide money so it can sell its products overseas at a lower price. #7

Trade Deficit answers Tariff Sanction Subsidy Quota Arms embargo Export subsidy

But, How Do I Benefit From Trade?                    But, How Do I Benefit From Trade? Determine where the shirt you are wearing was produced. (Look for the "Made in _______" tag.) How do you benefit from being able to buy goods made in other countries? 2. Would you favor a policy that would raise the price on imported goods?