Protectionism creates opportunities for monopolization, where prices can be maintained at artificially high levels. As foreign producers improve their products and decrease their costs, protected domestic industries become ever more dependent upon government aid. Because protectionism raises prices, it reduces living standards. 8 In 1984, tariffs on Japanese cars cost U.S. consumers an estimated 4.5 billion dollars, while clothing duties cost an estimated 8.5 billion dollars. The consumer pays higher prices when purchasing protected goods, and loses money that could be spent on other products.
Many protectionists contend that economic self-sufficiency is needed for national defense.
This argument, however, does not justify protection of the wool industry or beekeepers. When trade is free, consumers benefit from the products of other nations, and friendship and trust develop. When nations depend on one another for trade, there is little cause for war. The United States has fought several wars related to trade issues. The Revolutionary War began because Great Britain attempted to control U.S. trade.