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A proposal to raise tariffs as a trade bloc could create more problems than it would solve, particularly for a country like Argentina.

Members of the South American trade union Mercosur met Nov. 17 to discuss possible responses to the world economic slowdown triggered by the U.S. financial crisis. Mercosur members Argentina, Brazil, Paraguay and Uruguay appear to have come to an agreement — to be fully ratified in December — to raise the union’s common external tariff on a number of specific items. The decision raises the specter of previous economic downturns that were wildly exacerbated by protectionist measures that not only failed to foster domestic industries, but also set off a dangerous spiral into economic ruin. (The Great Depression comes to mind.)

Mercosur’s proposed tariff increases are aimed at a set of specific items, including wine, peaches, dairy products, textiles, leather goods and wood furniture, according to reports by MercoPress. Argentina has expressed concern over an increase in imports of manufactured goods from Brazil that has been facilitated by a dramatic drop in the Brazilian real vis-à-vis the Argentine peso, which Argentine authorities have tried to keep pegged to the dollar.

Argentina has been pursuing a number of measures to unilaterally raise tariff and non-tariff barriers to goods, such as increasing licensing requirements for and delaying the entry of imports, in an effort to protect its domestic industries from the global economic downturn. The idea is very simple: If you raise the cost of imports, you can stimulate demand for domestic goods and potentially protect jobs (and thus prevent social unrest). But the reality is much more complicated and much less promising.