What are the main types of trade protection?

The main types of trade protection are tariffs, quotas, and non-tariff barriers.

Tariffs are taxes imposed on imported goods. They are the most common form of trade protection. By increasing the price of imported goods, tariffs make them less competitive compared to domestic products. This protects domestic industries from foreign competition. Tariffs can be specific (a fixed amount per unit) or ad valorem (a percentage of the value of the good). For example, a country might impose a 20% tariff on imported cars, making them more expensive and thus encouraging consumers to buy domestically-produced cars.

Quotas are restrictions on the quantity of a certain good that can be imported. They are usually enforced by issuing import licenses to a select group of importers. For instance, a country might only allow 1,000 tonnes of foreign cheese to be imported each year. Once this limit is reached, no more can be imported, regardless of demand. This protects domestic producers from being overwhelmed by a flood of cheaper or superior foreign goods.

Non-tariff barriers are all other measures that restrict international trade. They can take many forms, including import bans, regulations and standards, subsidies for domestic industries, and bureaucratic red tape. For example, a country might ban the import of certain goods for health or environmental reasons, or it might subsidise its farmers to help them compete with cheaper foreign produce. Non-tariff barriers can be more effective than tariffs or quotas, as they can completely exclude foreign goods or make it very difficult for them to compete.

All these measures are used to protect domestic industries from foreign competition. However, they can also lead to inefficiencies and trade disputes. While they might protect jobs in the short term, in the long term they can stifle competition, discourage innovation, and lead to higher prices for consumers. Therefore, while trade protection can be beneficial in certain circumstances, it is generally seen as a hindrance to free trade and economic growth.