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How Is the Rise of Protectionism Affecting Global Trade Agreements?

The Rise of Protectionism and Its Impact on Global Trade

Protectionism is becoming more common, and it's changing how countries do business with each other. Here are some important points to think about:

  1. Higher Tariffs and Trade Barriers:

    • The World Trade Organization (WTO) says that the average taxes on trade, called tariffs, went up from 2.8% in 2018 to 3.4% in 2021.
    • In 2018, the United States put tariffs of about 19% on goods worth $370 billion from China.

  2. Changes in Trade Agreements:

    • Because of protectionism, many countries are looking closely at their trade agreements. The WTO reported that 20% of trade deal discussions worldwide have at least one protectionist rule in recent years.
    • The Regional Comprehensive Economic Partnership (RCEP) is a trade deal but faced criticism for having protectionist rules compared to earlier agreements.

  3. Effect on Global Supply Chains:

    • The Organisation for Economic Co-operation and Development (OECD) believes that global supply chains could shrink by 20% to 30% if protectionist rules keep growing.
    • This shrinkage might raise production costs by up to 4.8% around the world, meaning that everyday items could become more expensive for people.

  4. Economic Growth Predictions:

    • The International Monetary Fund (IMF) warns that trade tensions could reduce the world's economic output (GDP) by 0.5% to 1% by 2025, depending on how serious the protectionist measures become.
    • Countries that are adopting these protective rules might see slow growth. For instance, in 2021, the U.S. GDP growth was expected to be 2.3%, down from 2.9% in 2018 before the tariffs increased.

  5. Retaliation Effects:

    • When one country raises tariffs, others tend to respond in kind. For example, China reacted to U.S. tariffs with its own, which resulted in a drop in trade between the two countries. In 2019, U.S.-China trade fell by about $33 billion.

The rise of protectionism indicates a change that might slow down the benefits of globalization. This shift could have lasting effects on trade agreements and the stability of economies around the world.

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How Is the Rise of Protectionism Affecting Global Trade Agreements?

The Rise of Protectionism and Its Impact on Global Trade

Protectionism is becoming more common, and it's changing how countries do business with each other. Here are some important points to think about:

  1. Higher Tariffs and Trade Barriers:

    • The World Trade Organization (WTO) says that the average taxes on trade, called tariffs, went up from 2.8% in 2018 to 3.4% in 2021.
    • In 2018, the United States put tariffs of about 19% on goods worth $370 billion from China.

  2. Changes in Trade Agreements:

    • Because of protectionism, many countries are looking closely at their trade agreements. The WTO reported that 20% of trade deal discussions worldwide have at least one protectionist rule in recent years.
    • The Regional Comprehensive Economic Partnership (RCEP) is a trade deal but faced criticism for having protectionist rules compared to earlier agreements.

  3. Effect on Global Supply Chains:

    • The Organisation for Economic Co-operation and Development (OECD) believes that global supply chains could shrink by 20% to 30% if protectionist rules keep growing.
    • This shrinkage might raise production costs by up to 4.8% around the world, meaning that everyday items could become more expensive for people.

  4. Economic Growth Predictions:

    • The International Monetary Fund (IMF) warns that trade tensions could reduce the world's economic output (GDP) by 0.5% to 1% by 2025, depending on how serious the protectionist measures become.
    • Countries that are adopting these protective rules might see slow growth. For instance, in 2021, the U.S. GDP growth was expected to be 2.3%, down from 2.9% in 2018 before the tariffs increased.

  5. Retaliation Effects:

    • When one country raises tariffs, others tend to respond in kind. For example, China reacted to U.S. tariffs with its own, which resulted in a drop in trade between the two countries. In 2019, U.S.-China trade fell by about $33 billion.

The rise of protectionism indicates a change that might slow down the benefits of globalization. This shift could have lasting effects on trade agreements and the stability of economies around the world.

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