Explain the concept of trade deficits and their relationship to protectionism.

Explain the concept of trade deficits and their relationship to protectionism.

Trade deficits occur when a country imports more goods and services than it exports, resulting in a negative balance of trade. Protectionism refers to the use of trade barriers, such as tariffs and quotas, to restrict imports and protect domestic industries. Protectionist measures are often implemented in response to trade deficits, as they aim to reduce imports and promote domestic production. By limiting foreign competition, protectionism seeks to address trade deficits by boosting domestic industries, creating jobs, and improving the country's overall trade balance.