Can trade protectionism hit lower income families hardest?

This study note considers whether trade protectionism can have regressive effects on lower income families.

Yes, trade protectionism can hit lower income families hardest.

1. Increased Prices: Trade protectionism, such as tariffs and import quotas, can lead to increased prices for imported goods, which disproportionately affects lower-income families who spend a larger share of their income on basic necessities such as food and energy.
2. Reduced Choice: Trade protectionism can also limit the availability of imported goods, reducing the choice and quality of products available, particularly for lower-income families who may not have access to affordable alternative products.
3. Job Losses: While trade protectionism may provide some short-term benefits for some domestic producers, it can also lead to job losses in industries that are exposed to international competition, which disproportionately affects lower-income workers.
4. Inefficient Allocation of Resources: Trade protectionism can also lead to an inefficient allocation of resources, as domestic producers are sheltered from competition and may not be incentivized to improve their efficiency or lower their costs.

Overall, trade protectionism can have negative impacts on lower-income families by raising prices, reducing choice, leading to job losses, and creating inefficiencies in the economy.