Blending trade and national security policies

BOTH protectionism and mercantilism rely on shielding a country's domestic industries from foreign competition by taxing imports, but the two policies are not exactly the same. Policies pursued by advanced industrialised economics like the US that are aimed at protecting the producers, businesses, and workers of the import-competing sectors from foreign competitors, are driven mainly by pressure from those who have been affected by the economic dislocation resulting from the liberalisation of trade policies.

Indeed, few mainstream western economists would deny that protectionist policies do not have a negative effect on economic growth and economic welfare. Even those who promote protectionist measures admit that they could reduce trade and have a negative effect on consumers, producers and workers in the export sectors. But protectionists insist that such policies are necessary to correct the unequal distribution of losses and gains created by international trade and that they amount to measures to help ensure that certain industries would continue to survive, at least for a while, and allow producers and workers to gradually adjust to changes in the national and global economies.

Indeed, anyone who has been following the debate over US President Donald Trump's recent imposition of tariffs on steel and aluminium products, 25 per cent and 10 per cent, respectively, has encountered these arguments. Not even the White House seriously expects that the jobs in those sectors that were lost to foreign competitors would return from China and elsewhere to the Rust Belt areas of Ohio, Michigan and Pennsylvania.