Final answer:
During economic uncertainty, such as a threat of war, countries may enact protectionist policies to protect domestic industries. Examples include the 'buy America first' provision in the 2007 U.S. stimulus bill and U.S. steel industry tariffs. These policies are meant to safeguard national interests and jobs, but can result in trade tensions and are often not as strong in practice.
Step-by-step explanation:
Example of Protectionist Mindset During Economic Uncertainty
During periods of economic uncertainty, such as the threat of war, there is a tendency for a country to adopt a protectionist mindset. An example of this is the provision in the U.S. stimulus bill during the 2007 recession, which mandated that government agencies and contractors prioritize purchasing goods and services produced domestically. This "buy America first" sentiment is a reflection of protectionist policies that surface during challenging times, intended to shield the domestic economy from foreign competition. Such policies often include tariffs, subsidies, import quotas, or other import restrictions, which can result in trade tensions with other nations.
Some arguments favoring protectionism may relate to a nation's dependency on critical products, such as oil, or materials with national security implications. However, upon closer examination, these arguments are not as robust as initially thought, as relying solely on domestic sources can limit economic growth and innovation. Moreover, when a country experiences economic difficulties, such as a natural disaster, war, or high unemployment, a sense of insecurity can lead to increased saving and reduced spending, further exacerbating economic uncertainty.
In practice, protectionism during uncertain times may be carried out in hopes of preserving jobs and industries deemed vital for national interest, as seen in the case of the U.S. steel industry's struggle with competition from cheaper imports, specifically from Chinese factories.