Are protectionist policies beneficial to business?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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The answer to this is somewhat complicated because not all businesses have different interests.  Businesses operate in different ways and so protectionism can help them or hurt them.

The businesses that are most likely to prosper due to trade barriers are the ones that compete with exports and that do not really need much in the way of materials from outside the country.  When protectionist measures are imposed, the competition that these businesses have faced is weakened.  They are able to make profits more easily. 

However, some businesses do not compete with imports and/or need to get materials from foreign countries.  These businesses may be harmed by protectionist measures.  If the US, for example, erects trade barriers, other countries may well retaliate and these businesses will be less able to get the materials they need.

Finally, there are those who would argue that protectionism always hurts businesses because it makes them less competitive.  It allows them to avoid competing.  When they avoid competing, they no longer have to be as efficient as they would otherwise have to be.  This is bad for them because, if they ever do face competition, they will be less ready.

Therefore, it is difficult to answer this question in a way that applies to all businesses in all situations.

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