{"id":68260,"date":"2025-02-04T18:31:09","date_gmt":"2025-02-04T18:31:09","guid":{"rendered":"https:\/\/peraltafinancing.com\/accounting\/global-protectionism-impacts-on-trade-economy-and-business\/"},"modified":"2025-02-04T18:31:09","modified_gmt":"2025-02-04T18:31:09","slug":"global-protectionism-impacts-on-trade-economy-and-business","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=68260","title":{"rendered":"Global Protectionism: Impacts on Trade, Economy, and Business"},"content":{"rendered":"


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What is global protectionism?<\/strong><\/h3>\n

Global protectionism is the implementation by governments of tariffs, quotas or regulatory standards on goods imported into the country with a view to protecting domestic trade and industry. In other words, making imported goods more expensive to buy in a bid to make goods produced in the domestic market better alternatives to buy. Whether they are better alternatives in terms of performance as well as cost will ultimately be determined by the market through purchasing behaviours.<\/p>\n

Historical trend<\/strong>\u00a0<\/h3>\n

Historically, and certainly during my lifetime, there has been a trend away from protectionism with global trade and reduced barriers being favoured by governments. In other words, more trade liberalisation, with average global tariffs falling from 8.5% in 1994 to 2.5 by 2017. Over the same period, the world trade to GDP ratio has improved1<\/sup>, suggesting that liberalisation may be a facilitator for global trade and wealth creation.<\/p>\n

Impact on economy<\/strong><\/h3>\n
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Whilst protectionist measures are put in place with a view to protecting domestic trade and industry, the impact is not necessarily that straight forward, especially when there are other factors in play such as inflation, poverty and a real pressure on household incomes known as the cost-of-living crisis.<\/p>\n

Governments need to give careful consideration to the type of industry being offered protection and the impact of tariffs and therefore increased costs across the domestic supply chain. Not only might the impact be felt on businesses margins, it will be felt on the purse of the consumer, placing further strain on household incomes and therefore inflation.<\/p>\n

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Cross Boarder Impact<\/strong><\/h3>\n

Not only is the impact felt in domestic markets, it may also spill over into other countries if they supply inputs to the domestic market because of a reduction in demand for their products. Other countries may benefit from a positive effect however, if they supply suitable substitute goods.<\/p>\n<\/div>\n

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