What is meant by strategic trade policy?

Strategic trade policy refers to government initiatives aimed at improving a nation's competitive advantage in international trade. This approach typically includes measures that can help domestic industries gain an edge over foreign competitors, often through subsidies, tariffs, or other forms of support. By actively shaping the external market environment, governments can encourage the growth of certain sectors within their economies, fostering innovation, increasing efficiency, and bolstering overall economic performance.

The emphasis on enhancing competitive advantage is crucial because it recognizes the role of government in guiding resource allocation and investment into industries that are strategically important to the nation's economic health. This stands in contrast to simply restricting imports or exports, which does not inherently build competitiveness but rather may be focused on protectionism or limiting trade flows.