Protectionism: the great trade deconstruction

Following major political events of the last few years, populist and protectionist measures are increasingly affecting the global economy, which is feeling the strain.

The deconstruction of trade as we know it

The global market is hastily moving towards another protectionist era. As countries across the world continue to contribute new protectionist measures, it's not just Donald Trump re-entering the White House that is driving de-globalisation. 

In our new research compiled ahead of Trump's 2025 inauguration, we have found that 15,000 protectionist measures have been passed by countries since the start of 2017, compared to 4,000 'liberalising' ones. The United States (US) (12,254 measures) and China (12,035 measures) have been the biggest drivers of this, with the US showing a 175% increase since 2017, and China a 59% increase.  

The UK is also a big driver of this, contributing as the fifth highest on the list with 11,276 protectionist measures since 2017, a 6,700% increase. Japan and Germany also join the top five contributors, with 11,354 and 11,341 protectionist measures respectively. In contrast, Ghana and Iceland are at the bottom of the list, contributing the least to global protectionism with 1,118 and 1,138 protectionist measures since 2017 respectively. 

 

441%

Global increase in protectionist measures since 2017

#1

US the biggest driver of protectionism with 11,276 protectionist measures

15k+

New protectionist measures worldwide

#5

UK the fifth highest contributor with 11,276 protectionist measures


What is protectionism? 

Protectionist policy has muddied the water for businesses. The landscape is increasingly uncertain with growing complexities at both national and international levels affecting how industry responds. But what is protectionism and what are businesses being forced navigate? 

Protectionism refers to policy that protects domestic industries against foreign competition through tariffs, import quotas and subsidies, or other restrictions placed on the imports of foreign competitors. Governments can implement protectionist policies with the aim of improving economic activity but also due to concerns or sceptism towards multilateral trade agreements.  

As well as a barrier to trade, protectionism is increasingly influencing national assets, including technology. Protectionist policies are implemented by many countries in a bid to redress competition and protect the economy at a localised, domestic level. However, many economists suggest that the global economy benefits from free trade more generally and protectionist measure can be counterproductive on an international scale.  



The disadvantages and advantages of protectionism for businesses

Like any major global challenge, protectionism offers both risk and reward to businesses and the wider market. 

A protectionist trade policy may allow governments to promote domestic production and trade in goods and services, imposing tariffs subsidies and quotas or limiting foreign goods and services in the marketplace. Longer term, moving away from free trade policies or by deploying protectionist actions can be damaging to countries with slowing economic growth and increasing inflation.  

From a domestic perspective, protectionist measures restricting imports could actively drive trade success and production for businesses accessing less competitive markets, providing the advantage of strengthening national economic flow. The costs to international investors in exported goods, services or technologies are often driven up in response to trade barriers. For business looking to grow or enter new markets, protectionism may also stimulate domestic growth in industries with big international players.  

However, businesses also need to be aware of how protectionism can weaken national economies through highly restrictive measures imposing limitations outside a free market, and in turn stifling innovation. Protectionist measures can create less competitive marketplaces leading to economic isolation for both businesses and markets longer term.


How can we help?

Immersed in protectionism and its impact for several years, we keep an eye on the horizon to ensure you're equipped to confidently navigate change and seize opportunity. From cross-border transactions and international expansion to supply chain and workforce issues, we've got you covered. As a sector-focused, full service international law firm we're well placed to support you in this latest period of disruption in the global economy.


For more information on how we can help, contact David Lowe, Head of International Trade.

 

Contact David Lowe
Protectionism - CTA

Protectionism: a new era

What did the international business and trade landscape look like in 2020 in the wake of global protectionist measures? How could businesses have minimised the potential threat of global protectionism in 2021?


'Protectionism: a new era,' launched at a defining moment in time for businesses as protectionist sentiment forged deeper into global policy during a time of widespread economic fragility while the world navigated COVID-19 uncertainty.


The white paper explored in detail the new frontiers for business, which faced the need to navigate increasing populism, the growth in importance of regionalisation, the limited access to capital, and the disruptive impact of technology.

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