The size of the US economy today is nearly 13% larger than it would have been without the economic benefits of trade. Americans are much wealthier, more prosperous and more productive today due to trade and trade liberalization by more than $18,000 per household in increased output. A large and demonstrable part of America’s prosperity, economic output and high standard of living are a direct result of the gains from trading with the rest of the world. 

Protectionist Policy can bring about both advantages and drawbacks to the economy. According to the article which states, “Trump vowed to make sweeping changes to U.S. trade and immigration policy, threatened to impose steep tariffs on Chinese imports and proposed hefty tax cuts”, it shows that US are levying a heavy tariff on China so as to protect its domestic producers. Tariff are tax on goods that are coming into the country (Imports) or going out (Exports). By imposing a heavy tax on imports, the prices of imports will go up. Domestic producers will benefit as they are able to charge higher prices and continue the business. However, levying a heavy tax on tariff promotes inefficiency. This is mainly due to the inefficient usage of resources allocated to inefficient domestic producers. Consumers also face a higher price, this leads to a waste of money that they could have spent on other stuff. Also, in the worst case scenario, Tariffs could ignite a trade war if, as expected, China retaliates by imposing tariffs or other sanctions of their own on the United States. 

Moreover, the US already runs a trade deficit with most of its TPP partners. The TPP would simply have given them tariff-free access to lucrative US markets. Threats of import tariffs, while largely targeted at China and Asia, have also become a threat for European companies, particularly auto manufacturers. US factory workers earn around $2,000 a month, making it very tempting for US companies to move overseas and take advantage of lower labor costs. As a result, US labor unions have praised Trump’s decision to leave the TPP, while supporting his plan to reconfigure NAFTA and other international trade agreements.

“There is no question that near the top of the list of downside risks is the potential for more follow-through on the anti-free trade rhetoric,” said Jim O‘Sullivan of High Frequency Economics. To start with, China and other trading partners might launch investigations into specific sectors and restrict U.S. companies from doing business in their countries. If conditions escalate and worsen, China could enact its own tariffs on imports of U.S. goods and restrict engagement with U.S. services, crimping the free-flow of goods and services, and dragging on productivity, corporate profitability and consumer demand, according to the report, which reflected the perspectives and global expertise of its macro economists , market strategists and key sector analysts.Besides, if China decides to restrict good management with U.S services, it will have a negative impact on the U.S as the U.S. enjoys a $33 billion services trade surplus with China.

“Even after financial markets have retreated and hopes of a sudden spurt in inflation has faded, Trump vouch to make extensive changes to the U.S trade and immigration policy, two-thirds of the 70 respondents to the question in the Reuters survey about Trump's protectionist policies being the top risk to U.S. economy in 2017 said Trump’s protectionist policies were the biggest threat to the world’s largest economy this year nonetheless.” President Trump signed an executive order removing the US from the Transpacific Partnership (TPP). From an economic standpoint, this was the right thing to do, as the TPP was a disadvantageous trade agreement for the US. From a strategic standpoint, however, leaving the TPP may inhibit the US ability to exert influence in the Asia-Pacific region and may alienate US trade partners and allies. Additionally, one of the primary reasons for the TPP was to counter China’s regional economic dominance. Now that the US has pulled out, one of the options left for the remaining country members is to allow China to fill the vacant seat.

Globalization is when there is an increasing international activities in all aspects of our Lives – Social, Economical, Political, and Cultural. It is typically defined by the increasing movements of 4 factors across national boundary - Goods & Service, Capital, Labour, and Culture. Globalization has impacted nearly every aspect of modern life and continues to be a growing force in the global economy. While there are a few drawbacks to globalization, most economists agree that it's a force that's both unstoppable and net beneficial to the world economy. There have always been periods of protectionism and nationalism in the past, but globalization continues to be the most widely accepted solution to ensuring consistent economic growth around the world.

Firstly, globalization leads to a Widening Income Gap & Stagnating Middle Class income. In US, since 1980, average real hourly compensation has increased at an annual rate of 1 percent, or half the rate of productivity growth. Wage gains have also become considerably more unequal, with the biggest increases claimed by the top 10 percent of earners. Moreover, technological change and globalization have reduced the share of middle-skill jobs in overall employment, while the share of lower-skill jobs has increased. These trends, along with a falling labor force participation rate during the last decade, explain the stagnation of middle class incomes. For most Americans, wages are the primary source of disposable income, which in turn drives personal consumption spending — by far the largest component of aggregate demand.

Secondly, globalization leads to Interdependence. Globalization leads to interdependence between nations, which could cause regional or global instabilities, if local economic fluctuations end up impacting a large number of countries relying on them. Not surprisingly, given its role as global trade hub, Asia would bear the brunt of any U.S. shift toward protectionism. Consider that 8 of the 15 countries with which the U.S. has a trade deficit are in Asia, including South Korea, Japan and China, all of whom would feel the sting of the U.S.’s potential protectionist swing. 

Lastly, globalization leads to Anti-Immigrants and Anti-Muslim Sentiments in developed Countries. The United States has a long and proud history as an immigrant nation. But those communities have been left paralyzed by fear following President Donald Trump's sweeping immigration reforms. Moreover, the number of anti-Muslim groups in the US tripled between 2015 and 2016 (The number of anti-Muslim organizations grew from 34 in 2015 to 101 last year, according to the center. The number of hate groups rose from 892 to 917)  - a surge likely fueled by hate rhetoric used by Donald Trump during his presidential bid, according to the Southern Poverty Law Center.

Unemployment in the US has dropped below 5%, a good record on the surface for Obama. However, Trump has focused on those parts of the economy and country where the recovery since the financial crash has not being felt, gaining traction with those Americans who have seen their industries diminish and their wages stagnate.

On the campaign trail, Trump chose the once booming industrial centre of Detroit to set out his economic plan. He cited the motor city’s higher-than-average unemployment rate and crime levels in a speech that played on widespread worries about the decline of US manufacturing. 

Trump has said his protectionist policies will keep “jobs and wealth inside the United States” . He has promised to increase employment, saying his plans for lower taxes, trade barriers and tighter immigration rules would lead to stronger economic growth. However, many economists warn his plans could make things worse not better, hindering economic growth and thereby employers’ ability to create new jobs.

“Through 2017, economists predicted the economy would expand at an annual rate of 2.1 percent to 2.5 percent each quarter, just 0.1 percentage point higher than the previous estimate”. If Mr Trump can push his proposed tax cuts and new infrastructure spending past fiscally conservative Republicans in Congress, the package could boost US growth and the strength of the dollar, with positive spillovers for the UK. But there are significant risks because of uncertainty about Mr Trump’s plans and how far he will follow through with his protectionist rhetoric. 

“Pay growth is expected to increase from an average of 2.8 % in December’s poll to 3% this year”. This is because Trump wants to jolt the U.S. economy back into action. He predicts a virtuous cycle in which his tax plan allows companies to raise their profits from new investments, driving them to boost spending. Then new machinery and tech breakthroughs will raise worker productivity and, hence, wages and employment.

Trump’s protectionist policies were the biggest threat to the world’s largest economy this year. While increased protectionism is not the base case, the risk of it occurring is meaningful. Such policies might improve U.S. economic conditions in the near term, but the long-range effects of protectionism—from proposed tax reform to import tariffs and potential renegotiation of free-trade agreements—would be negative, both domestically and globally, with particular impact on countries such as China.

“Sweeping tax cuts for businesses and individuals, and the prospect of some infrastructure spending, have also not brightened prospects for U.S. economic growth, which Trump has said he aimed to boost to 3.5 percent.” The stifling of free trade will cause more harm than good in its goal of benefiting Americans (Devin Ryan, 2017). 

Moreover, while those projected growth rates may be considered healthy for the economy at such a late stage of the recovery cycle, they could do little to boost inflation much beyond the Federal Reserve’s 2 percent target. Inflation pressure is more likely to come from a round of retaliatory tariffs if Trump’s protectionist agenda becomes a global reality. Fed policymakers recently warned that with the “If the unemployment rate falls some more, it is going to add to upward pressure on wages and inflation and reinforce the case for Fed tightening,” O‘Sullivan said. Therefore, while having the intention of saving jobs, protectionism can actually cause a net-loss in jobs as the unemployment rate was 4.7 percent in December.

In recent years, global trade has already grown sluggish, compared to previous periods.The slowdown is rooted in several factors, including cyclical conditions, such a stronger dollar and lower commodity prices, as well as changing growth patterns for large countries and the lack of progress on trade deals. With U.S economy close to full employment, an expansive fiscal policy could lead to faster rate hikes than currently priced in, pushing the current high U.S. dollar even higher. This results in a slowdown in the economy and increase the potential negative repercussions on growth. A more protectionist U.S. regime would only add to the challenge of a slowing global productivity trend.

Free trade benefits consumers through increased choice and reduced prices, but because the global economy brings with it uncertainty, many governments impose tariffs and other trade barriers to protect the industry. There is a delicate balance between the pursuit of efficiencies and the government's need to ensure low unemployment. Instead of implementing protectionist policies the US needs to develop a better set of trade policies.

https://www.huffingtonpost.com/laura-tyson/us-income-inequality-costs_b_6249904.html 

http://edition.cnn.com/2017/02/14/us/trump-us-immigration-reaction/index.html 

https://www.washingtonpost.com/blogs/right-turn/wp/2017/06/05/the-high-cost-of-the-anti-trade-wave/?utm_term=.d059768f90d8 

https://www.foreignpolicyjournal.com/2017/02/01/trumps-new-protectionism-economic-and-strategic-impact/ 

https://www.morganstanley.com/ideas/protectionism-risks-are-rising 

https://www.theguardian.com/us-news/2016/nov/09/trumps-economic-policies-protectionism-low-taxes-and-coal-mines 

http://fortune.com/2017/02/16/president-donald-trump-economy-executive-orders-policy/ 

One of the major issue of globalization is the impact on the global economy. Globalization may help improve the economy of certain country such as in this case, the United States. It helps to improve economy of the United States by allowing them to trade globally with other countries. However, the impact caused by this is that United States might be affected economically by other countries. Also, it might cause the loss of jobs in United States, as people will want to buy imported goods at cheaper price. Consumers will then leave out those goods that are manufactured locally, causing lower production of local goods and eventually loss of jobs for people in charge of manufacturing local goods. An example of this is the 2008 economic crisis, since then “global capital flows fell from $11 trillion in 2007 to a third of that figure in 2012” - https://www.thebalance.com/globalization-and-its-impact-on-economic-growth-1978843 . Thus, protectionism such as banking regulations, tariffs have been put in place in United States to protect the local manufacturer and economy. 

 

Intended Consequences
US President Trump feels that many countries, especially China, are stealing countless jobs from USA. It is reported that the US has lost at least 2 million jobs between 1999 to 2011 due to Chinese exports into the US alone. Trump has said before that China are using America "as a piggy bank to rebuild" themselves, and that America has to "stop our jobs from being stolen from us".
As a result, Trump has chosen to take a more aggressive stand towards China in his protectionist policies as he believes this would create Job Protection and free up more jobs for US citizens.
Moreover, the Trump administration also feels that China cheats on its trade deals through unfair trade practices. Peter Navarro, policy advisor to Trump, says China uses tactics such as "currency manipulation and illegal subsidies", and hence, imposing the 45% tariff on China as a protectionist policy "is a defensive measure" to protect themselves from China's deceit.

Unintended Consequences
The potential 45% tariff on China can hurt China very badly. Economists predict that 45% tariff will cause a minimum decrease of 50% (which can go up to 87%) in Chinese exports to the US, causing losses of about $385 billion. As mentioned earlier, the US is China's biggest export market, and China's overall export and GDP is expected to decrease by at least 9% and 4.8% respectively if the tariff is imposed by US.
All of this would in turn cause business to go under and jobs to be lost. China's exports currently create about 120 million jobs, of which 20 million is through exports to US. This number will definitely take a huge hit if the 45% tariff was to be imposed.
More countries can also follow the US and impose tariffs on China, which would only add on to all these problems mentioned.
However, this tariff isn't only going to affect China. It will cause adverse effects on the US as well. Goods manufactured by China and imported into the US has kept prices lower than if it were to be made in the US. This has helped many Americans, especially those with lesser money. Now if this 45% tariff was to be imposed, then that would result in a considerable increase in the prices of goods, and can make once cheap or affordable products more expensive and affect purchasing power of US citizens.

Conclusion
Hence, this tariff that US are about to impose on China is an example of protectionist policy not being a useful tool for economic growth, as not only does it harm China by eliminating jobs, causing financial losses due to lesser exports and cut down GDP, it also harms the US as citizens might not be able to cope with or adapt to a sudden and sharp rise in prices domestically. All this will not contribute to the growth of the economy of either country.

During the 2016 presidential election, then-candidate Donald Trump promised to protect manufacturing jobs, including steel. Donald Trump intends on reducing imports of steel to prevent steel imports from posing as a threat for national security.

Is protectionist policy a useful tool for economic growth. 

Overall protectionism hurts the economy both locally and globally in the long term due to dead weight loss outweighing any local industry benefits. 

Protectionist policy such as restrictive quotas and other government regulations can reduce imports and increase prices of imports. According to the article, it can bring about disadvantages to the steel industry since local demand is already apparently low, meaning it will not “preserve jobs or revitalize the steel industry”

Trump disagrees as he believes steel imports can threaten national security. According to the 1962 Trade Expansion Act, if the secretary of commerce deems steel import quantities threatening to national security, the president, Donald Trump, can impose protectionist policies to reduce imports.

However national security is apparently not an issue caused by steel imports. “While steel is certainly useful in the weaponry upon which the U.S. has relied during recent wars in Iraq and Afghanistan, the U.S. military relies less on steel and a lot more on high-tech plastics and fabrics”. Additionally, only a mere 3% of U.S. produced steel goes to the military. This indicates that steel imports may not pose as a threat to national security as Donald Trump may suggest, meaning in turn that the upcoming protectionist policies that are to be enacted, will more likely harm than help the industry as Trump has intended due to the changes in prices of steel imported, and lack of demand in the U.S.

Overall some effects of globalization include increasing in overall average income, meaning an upward movement towards the middle class, which in turn means more spending on goods. Since free trade overall reduces cost of goods due to comparative advantage, protectionism does not benefit the majority of the population moving towards good consumption. However, globalization has also led to more foreign brands producing goods for cheaper prices than the importing country, resulting in loss of local manufacturing business since the consumers prefer cheaper imports compared to local products. Thus protectionism aims to ensure the economic and political independence of a country. Thus Donald Trump wants to impose tariffs on steel to ensure political independence, since much is being imported, resulting in it being a term of negotiation for other countries -

Protectionism as a policy is implemented in order to protect the producers, businesses, and workers of the import-competing sector in a country from foreign competitors. The intended consequences of protectionism in the steel industry is to prevent “cheap imports from shutting down plants and lay off workers” and strengthen the steel industry in U.S. to continue its ability to produce steel-related products that are crucial to the U.S. - https://www.ft.com/content/ff9e54cc-40a3-11e7-9d56-25f963e998b2

Local steel industry executives are taking advantage of the increase in steel prices due to protectionist policies. They use the price advantage to increase returns or attract buyers instead of reinvesting in their firm and employees. Protectionism in this case might not preserve jobs or firms but instead, cause steel to be more costly to customers.

Based on past steel tariffs, when President Bush increased import tariffs up to 30%, about 200,000 Americans working for companies that rely on steel for their products, lost their jobs. 12 million Americans work in manufacturing and construction industries, which rely on domestic and foreign steel to create finished products. Tariffs would raise costs and threaten those jobs. - http://www.heritage.org/sites/default/files/2017-06/FS_174.pdf

The protectionist policies President Trump intends to impose on steel imports can have many effects on U.S.’s economy. The policies can cause increased cost of steel and risk of loss of jobs. However, it may prevent cheap imports from causing local steel plants from closing. President Trump should weigh the advantages and disadvantages of such policies and can instead consider implementing other trade policies that are more beneficial to the economy.