Why are International Trade and Protectionism so Important? When Have We Seen them Take Place?

By Arjun Shekdar

International trade has long been a driving force of global economic growth, fostering innovation, efficiency, and prosperity through the exchange of goods and services across borders. Over time, many countries have benefited from open markets and free trade agreements, which reduce barriers and encourage competition. However, rising protectionist policies—such as tariffs, quotas, and subsidies—have sparked debates about whether these measures protect domestic industries or harm global economic stability. Recent geopolitical tensions, supply chain disruptions, and concerns over national security have further intensified this trend. As nations weigh the benefits of free trade against the perceived need for protectionism, the future of global commerce remains uncertain. But what are International Trade and Protectionism, and why are they important?

What is International Trade? 

International Trade is the process of purchasing goods, products, services, and more from companies in different countries. Goods like raw materials, food, and machinery can all be found in the international trade market. The purpose of international trade is for countries to focus on what they do best in the most cost competitive fashion to grow their markets and to let the free market decide the supply and demand equation. Globalization was the concept that allowed each country to be the best at what their labor, capital and technology can produce to compete in a global market governed by the rules of economics. International trade was essential to the rise of the global economy, where supply and demand both impact and are impacted by events all over the world.

What is Protectionism?

To define protectionism, it’s “policies set by the government that restrict international trade to help domestic industries.” The goal of these policies is to enhance activity economically in the domestic market and to state concerns regarding the quality of goods and safety. In some cases, protectionism is also pressuring of foreign governments. Despite the controversy behind protectionism, those who support it say it takes care of job creation and helps to boost a country's workforce by protecting domestic businesses from the global market. Protectionism includes the policies of the government that forbid international trade in order to stand by domestic industries, coming in the form of tariffs, quotas, and subsidies. 

When Have We Seen Them Take Place?

1. “Liberation Day”, announced by President Donald J. Trump

On April 2, 2025, President Trump did something historical. breaking tradition with the mantra of globalization, President Trump announced what he called “Liberation Day” which was the biggest bundle  of tariffs rolled out ever since the Smoot-Hawley Tariff Act, which happened in 1930. Mind you, the Smoot-Hawley Tariff Act had caused a global trade war and extended further into the Great Depression. With this knowledge of history, this really only raises one question, “why did Trump come out with that policy shift on Liberation Day?” Well, the story behind Liberation Day had two parts to it. The one we’re going to focus more on has to do with Protectionism. The President launched Liberation Day because this was “needed” to neutralize the open years and decades of the market of the United States being met with asymmetrical tariffs from other countries which had “boxed out” the goods of the U.S. Although fighting fire with fire is a more aggressive move, which cannot be overlooked, he put import tariffs on all of these countries, meaning not only was he trying to get even with them, but he was trying to “un-box out” his goods by putting tariffs on other nations, boosting the domestic markets, products, labor and goods.

2. Trump Extends Tariff Deadline on China by 90 Days

About a month ago in August, The President of the U.S. signed an executive order which prevented higher U.S. tariffs on Chinese goods from pushing back into action for another 3 months. This order was signed in a matter of hours before the pause on Trump’s tariffs were assigned to expire. After pushing the deadline out, it is now set to around the middle of November. This move was expected of Trump, as if he hadn’t done it, then the U.S. duties on China would’ve taken them back to April, when the tariff war between the two was at its peak. In case you were wondering, when the war was at its peak, Trump put tariffs up to 145% on China, and China came right back with retaliatory tariffs of 125%. But, to avoid even more chaos from breaking out, a meeting between negotiators dropped down the tariffs to 30% and 10%, respectively.

3. U.S. Executive Order 14245 – Tariffs on Countries Importing Venezuelan Oil

On March 24, 2025, President Trump issued Executive Order 14245, which was given the title, “Imposing Tariffs on Countries Importing Venezuelan Oil.” In 2024, the U.S. imported around 230,000 b/d from Venezuela, making it the fourth biggest U.S. supplier. However, this year, the President set a 25% tariff on any country that buys Venezuelan Oil, for many reasons, claiming that Venezuela has deliberately sent tens of thousands criminals of the highest level of threat. The goal of Executive Order 14245 was to force the South American nation into removing any threats they’d imposed, and to not do so again. 

Why are they so important?

International Trade takes up a big role in helping a country to increase their own market, selling and/or being sold goods that may be more expensive to produce domestically. It also helped to start/grow the global economy to what it is today, as it sparked supply and demand, helped make prices more convenient on both ends, and has a huge impact on the economy today. 

Protectionism is also essential to the world and its economy because it helps to protect and support domestic industries, encouraging those in the country to buy domestic instead of international. It also reduces dependency on foreign goods, and increases dependency on domestic goods.

Sources: 

1. Trump says countries that buy Venezuelan oil will face 25% tariff | AP News

2. https://www.ft.com/content/a37a5d0c-4d51-49ff-a939-4f71dd095b3a?

3. “Liberation Day” Tariffs Explained

4. International (Global) Trade: Definition, Benefits, and Criticisms

5. Understanding Protectionism: Tools and Examples for Trade Policies

6. Smoot-Hawley Tariff Act | History, Effects, & Facts | Britannica

7. Trump extends China tariff deadline by 90 days