1. Why do China buy 80% of luxury goods abroad?

2. Why do countries protect?
Protect infant industries
Protect strategic industries e.g. EUs Common Agricultural Policy is to create food security for Europe by protecting its agricultural sector.
Protect non-renewable resources
Deter unfair competition
Save jobs
Help the environment
Limit over-specialisation

3. Impact of protectionist policies
Consumers
Workers
Producers
Equality
Governments
Living standards

4. Protectionist Measures
a) Tariffs
b) Import quotas
c) Other trade barriers:
government legislation
domestic subsidies

5. Tariffs Tariffs are a tax placed by the government on imports.
They raise price for consumers, lead to a decline in imports, and can lead to retaliation by other countries.

6. Quotas A physical limit on the quantity of the good imported.
Increases the share of the market available for domestic producers.
But it does cause welfare loss….

7. Government Legislation
Legislation can be used to stop firms from selling dangerous products

8. Subsidies Can be used to increase exports and reduce imports.
Export subsidies to increase exports and support industries
Subsidies to reduce imports – subsidising firms that compete with imports.

9. Discussion/Debate
Is protectionism ever justified? Support your answer with the articles below and your own research into current political opinion.
What are the necessary conditions for free trade?
Margaret Thatcher’s view of protectionism.
Is this still a valid political argument today?
What are Donald Trump’s views?
Does it depend on the economic climate?