We live in a world where the mantra of free trade is recited as a panacea: lower tariffs and open markets are capable of creating economic efficiency, thereby raising profits, increasing employment, and generating higher economic growth. However, the reality is that all major industrialized powers protect their domestic industries. The United States, for all the brave talk by both political parties, is no exception, nor should it be. There are some industries that can legitimately be considered as vital for domestic security, and if protection is needed to ensure its domestic production, then so be it. Other industries may be vital for national interests in that replacing the jobs their failure would cost would be exceedingly difficult. This paper will analyze the steel and cotton industries in the United States and demonstrate why protectionist measures are not only needed but have been extensively utilized by both Republican and Democratic Presidents.
Since the mid 1990's, the United States steel industry has been confronted with rapidly escalating difficulties. In a ten-year period, more than 30 United States steel producers have gone into bankruptcy. While different companies and parts of the industry have been affected to different degrees, the two types of domestic producers of raw steel, integrated mills and minimills, have been impacted the most. The influx of cheap foreign steel has undermined the ability of the United States industry to produce steel economically. This is due to the fact that American steel production facilities are outmoded and inefficient compared to the foreign competition. While America's steel forges date back to the World War II era, Europe, Japan, and Russia's production facilities are modern and have been built within the last thirty years (Inkenson, 2004). This has given foreign producers a competitive advantage over American producers, a situation that has had an increasingly dire ...