Sample Essay
Domestic tax policies have been found very instrumental when it comes to application of protectionism measures. Favorable taxation on foreign goods disadvantages local ones. This is by conducting the burden of taxation to local industries that are to earn the government revenues. This may kick the local market thus creating a trade deficit due to increased imports (Sicilia et al. 23). Protectionist therefore proposes that foreign goods be taxed heavily compared to local one to avert this problem.
Introduction of practice of protectionism is seen by other countries as a malice aforethought intended at denying them access to certain markets. This leads to a very aggressive move by these countries targeting the involved country. Unfair trade practices come in destabilizing the market and negatively affecting the way these countries trade (Sicilia et al. 31). As a result, major negative impacts are felt at national level in terms of negative balance of trade or trade deficit.
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