Rapid Fire
Beggar-thy-Neighbour Policy
- 08 Feb 2025
- 1 min read
The US imposed tariffs on imports from China, Canada and Mexico as part of Beggar-thy-neighbour policy.
- About Beggar-thy-Neighbour Policy: It is a protectionist strategy that involves measures like trade barriers, currency devaluation, and subsidies, to improve its own economic situation at the expense of other nations.
- Origins: Adam Smith coined the term in The Wealth of Nations (1776), criticizing mercantilism that impoverishes others and advocating free trade for all nations' benefit.
- Supporters’ Arguments: Help boost the domestic economy by protecting important industries and jobs.
- Currency devaluation can reduce export costs and increase import prices, possibly resulting in a trade surplus.
- Critics’ Arguments: Countries imposing such policies often face retaliatory tariffs, leading to a decline in global trade and investment. E.g., the Great Depression (1929-39).
- Benefit domestic producers but harm consumers due to higher prices from reduced foreign competition.
- Alternative View: Countries should refrain from retaliating and instead adopt unilateral free trade.
Read More: Trade War
