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Trade Theories and Protectionism: Trade Patterns of U.S

Since the war, world trade has grown faster than world output and both have grown at sustained rates until the 1990s. One of the most obvious reasons for international trade is provided by the fact that countries cannot produce all the goods they need, or cannot produce them as efficiently as other countries. Hence, it pays a country to specialize in the production of some goods only. Specialization is undoubtly one of the bases for trade: countries specialize in the production of certain foods, producing more than they need and exporting the surplus product, which is not domestically consumed .

In trading terms, the various theories of charring, indicator analysis, cycle behavior, and waves may have more to do with how traders describe their actions that with their actual behaviors and understandings. Trading theories establish broad principles, which identify and classify the rationale behind the need for nations to trade with each other in pursuit of mutual benefit . The United States is one of the prevailing countries in a global aspect these days; hence, determining the style of the trade system they possess through the applications of theoretical principles that might enhance trade system knowledge of applications.

In the course of this theoretical application, the primary country to be examined shall be the United States. What trade systems are they following and the theoretical frameworks they utilize? Discussion Since the late 1970s, many Americans have seen the rising tide of foreign imports as a threat to the very existence of basic industries, such as automobiles, steel, shoes, and textiles. Indeed, public opinion polls reporting increasing support for limiting imports of foreign products. Record deficits in the U.

S balance of trade during the 1980s are helping to translate that support into action by bringing Congress close to enacting blatantly protectionist legislation. Even the Reagan administration, strongly committed to free trade in its rhetoric, has at times succumbed to the heightened pressure . During its first term, the administration persuaded Japan to limit exports of automobiles to the United States and agreed to tighten quotas on imports of textiles . The economic theories stress either trade-imperialism or capital-imperialism .

The trade-imperialism theory emphasizes the need to find new colonies to safeguard trade (protectionism), and discover and exploit new natural resources . Many economists have decried the apparent drift toward protectionism. They tirelessly point out that U. S balance-f-trade problems have resulted primarily from a succession of record federal budget deficits that have drained private savings and have generated rising volumes of imports to meet domestic demands for consumption and investment .

Protectionism clearly threatens this interdependence, and with it, much of the economic progress that has been recorder throughout the world in recent years. At a minimum, raising U. S trade barriers would reduce the real incomes of American consumers, increasing the prices of both imported goods and the domestically manufactured products with which they compete . However, as with the theoretical framework of comparative advantage, which depicts the presence of specializations for products imported by countries, the competition in the free trade market may become imbalance due to imported goods from specializing country .

A country is said to have an absolute advantage over another in the production of a good, if it can produce it with less resources . Suppose there are two countries, U. S and Japan, both producing automobiles. Suppose that the marketing conditions in U. S are more suitable for selling automobiles due to high-infrastructure industries and highly popularized conditions than in Japan; however, labor force of the Japanese is more productive than United States, we can say that Japan has an advantage in the production of both goods . In such case scenario, the U.

S needs to utilize the conceptual framework of protectionism in order to maximize and protect the trends of domestic products in spite of the Japanese product influence; thus, protectionism occurs as mandated by the economic need of U. S. Despite of international trade becoming relatively less important for all major economies, and despite a dramatic increase in global protectionism, trade became much more important for the Japanese economy; hence, technological changes are initiated by the Japanese in order to outmatch the competitors of trade .

If in case protectionism proceeds with implementations of barrier for trade policies, the negative effects may outweigh the positive implications. Protectionist measures would reduce incentives for American firms to operate more efficiently, to hold down costs, and to develop new technologies and products. At worst, protectionism could lead to retaliation by U. S trading partners, triggering the kind of downward economic spiral. The immediate concern, perhaps, is curtailing imports from developing countries that are heavily in debt could severely strain an already fragile international banking system .

The central economic challenge, therefore, now facing the United States is to find ways of enabling political systems to withstand or constructively divert pressures for protectionism. Conclusion In the conclusion of the study, the marketing trend of protectionism may not be as feasible at providing the best strategical components of marketing. With the application of theoretical principle of trade, comparative advantage, U. S may place itself in disadvantage if protectionism is implemented due to the specialization present in imported good from competitors such as Japan; hence, reduces marketing benefits.

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