AP MacroeconomicsInternational Trade & Finance
Infant Industry Argument
The infant industry argument holds that new domestic industries deserve temporary tariff or quota protection until they grow large enough to compete with established foreign rivals.
Young industries often lack the economies of scale, learning-by-doing, and accumulated know-how of mature foreign competitors, so unrestricted trade could kill them before they become viable. Temporary protection is meant to let them develop, after which barriers should be removed. Critics note governments rarely pick winners well, protected firms may stay inefficient ('grow up' never happens), and trading partners may retaliate.