Support for Trade Restrictions

There are some economically valid arguments in favor of trade restrictions. The major ones are:

-          Infant Industry: Developing nations need to protect their local industry until it can grow to a scale where it is able to compete internationally.

-          Dumping: Dumping is the practice of selling goods in a foreign market at a price lower than that which prevails in the domestic market. The intent is (presumed to be) to drive domestic producers out of business, after which a price hike can be expected.

-          Countervailing Duties: If goods are produced in a nation where the industry is subsidized, and then sold in a nation where no such subsidy exists, then domestic producers will be at a competitive disadvantage to imports from the subsidizing nation. Where such an imbalance exists, it is acceptable to impose a tariff intended to just equal the advantage provided by the subsidization.

-          Squeaky Wheels: While on average everyone benefits from free trade, individually some people lose badly—because they are laid off, or their business cannot compete, or what have you. It is difficult to build a political organization a large number of small gainers, but it is relatively easy to build a political organization around a small number of big losers; say, unemployed steel workers in Pennsylvania. While theoretically it is possible for the losers to be compensated from the benefits of the gainers, in practice this rarely (if ever) happens.