Which is a potential consequence of protectionism?

Which is a potential consequence of protectionism?

• A. Retaliation by trade partners
• B. Lower prices for consumers
• C. Increased efficiency
• D. Faster growth

Answer: (A)

Protectionism can provoke retaliation by trade partners. When imports are restricted, trading partners often respond with their own barriers to protect their industries, creating a cycle of escalating restrictions. This mutual shielding reduces overall trade, raises costs, and can slow economic welfare for all involved, making retaliation a likely consequence. Lower prices for consumers are unlikely because tariffs and quotas push up the cost of imported goods and can reduce competitive pressure on domestic firms. Increased efficiency and faster growth are typically undermined by protectionism, which shields firms from competition and misallocates resources, rather than boosting them.

Protectionism can provoke retaliation by trade partners. When imports are restricted, trading partners often respond with their own barriers to protect their industries, creating a cycle of escalating restrictions. This mutual shielding reduces overall trade, raises costs, and can slow economic welfare for all involved, making retaliation a likely consequence.

Lower prices for consumers are unlikely because tariffs and quotas push up the cost of imported goods and can reduce competitive pressure on domestic firms. Increased efficiency and faster growth are typically undermined by protectionism, which shields firms from competition and misallocates resources, rather than boosting them.