Should the United States adopt protectionist trade policies for specific goods like steel, even if it translates into a rise in consumer prices? Consider this question from both perspectives, giving some reasons why the US should and why the US should not. Which path is considered to be the most prudent?

Protectionist trade policies are often seen as only a short-term resolution, as they ultimately lead to a rise in consumer prices. Protectionism is the practice of trying to protect one nation's own business through the use of tariffs. A tariff is designed to make foreign competitors' goods more expensive. Tariffs, however, can be dangerous to the overall consumer economy.

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Protectionism is one of the most hotly debated issues in economics over the last century. First, let us deal with what protectionism really is. In short, protectionism is restricting international trade with the hope in increasing domestic trade. The idea is that if the United States, for example, does not import as much steel from say, China or Germany, then United States steel companies' production should thrive. On the surface, this seems like an easy and prudent concept. However, just as many things in life, there is more to the story.

The most common way to establish a protectionist posture in economics is the use of tariffs. A tariff, simply put, is a tax on an imported good. So, in the case of our example, the United States would place a tariff on imported steel from China or Germany. The idea is to make the Chinese or German steel more expensive so that consumers would be enticed to purchase US made steel. However, this is not always the case. In point of fact, historically speaking this has almost never been the case. If the United States places a tariff on German made steel, one would have to consider what the German response would be. Naturally, they would want to tax any goods made in the US being sold in Germany. This can lead to a sort of trade war between countries. The result of this war would be a rise in consumer prices on many goods across the board, not just steel.

Many economists believe that the fastest track to a recession is through the path of tariffs. You have to bear in mind that an economy thrives on money circulation. A tariff can lead to a slowdown or worse, stoppage of that circulation. So in short, both points have merit, but protectionism is only a short-term fix for a struggling industry. And in the long run, that same protectionist stance may kill that same industry.

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