The largest economy on the planet is quickly moving to a protectionist stance in its international trade. US president, Donald Trump, has spoken of withdrawing from the Trans-Pacific Partnership trade deal signed by his predecessor Barack Obama; renegotiating or abandoning the NAFTA trade deal with Mexico and Canada; imposing a 35% tax on every car imported to the US, and even threatening China with a 45% tax on its exports to the US. This could have important ramifications for the US and other world economies.
A protectionist policy is any policy that provides an unfair advantage to a home industry versus the international competition. The practice has a long history in economics. Mercantilism – where countries augmented their power through regulation that favoured their own economies – was prevalent until the 18th century. But, with trade as one of the engines of economic growth in the 19th and 20th centuries, free trade for all became the benchmark and the goal. And the US was at the forefront of establishing bodies to promote and regulate international trade such as the GATT and its successor, the World Trade Organisation.
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