2. Any regulation or policy imposed by the government that
restricts international trade.
The policy of erecting trade barriers to shield
domestic markets from foreign competition is
called Protectionism.
4. Types of Trade Barriers
• Tariffs
– Tax on imported goods designed to protect
domestic producers from foreign competition
– Most common type of trade barrier
– Easiest to impose; easily applied to goods before
they enter the country
– Tariffs make all goods more expensive
5.
6. Type of Trade Barriers
• Import Quota
– Specifies the maximum amount of a commodity
that may be imported in a particular period.
– Protects domestic industries but do not raise
revenue for the government.
– It also raises prices for consumers as costlier
domestic items replace cheaper imports once
quota is reached.
7. Types of Trade Barriers
• Embargo
– severe form of trade restriction in which a nation
completely bans the importing of products from
another country or forbids exporting its own
products to that country.
Example: Arab states
embargo on travel and
trade Qatar
8. Types of Trade Barriers
• Voluntary Export Restraint
– a trade barrier by which foreign firms “voluntarily”
limit the amount of their exports to a particular
country.
– Also known Export Quota, self-imposed by the
exporting country
10. Why are Tariffs and Trade Barriers Used?
• Domestic employment protection argument
• Consumer protection argument
• Infant industry argument
• National security argument
• Retaliation argument
• Protection-as-bargaining-chip argument
• Environmental-and-labor-standards argument
11. • Domestic employment protection argument
Why are Tariffs and Trade Barriers Used?
It assumes that allowing cheap imports into a country
destroys jobs by forcing domestic companies to cut costs,
lay off workers, or even go out of business.
12. Why are Tariffs and Trade Barriers Used?
A government may levy a tariff on products that it feels
could endanger its population.
13. Why are Tariffs and Trade Barriers Used?
• Protecting “Infant Industries”
The infant-industry argument for protection holds that
government should protect an emerging industry until it
is able to compete on its own.
14. Why are Tariffs and Trade Barriers Used?
• National security argument
This argument states that industries that are vital to
national security must be protected.
Trade restrictions are needed to avoid dependence on
foreign suppliers during times of conflict.
15. • Retaliation
Why are Tariffs and Trade Barriers Used?
Tariffs is employed if trading partner has not played by
the rules.
16. Why are Tariffs and Trade Barriers Used?
• Protection against Anti-Dumping argument
Foreign producers are thought to be selling goods at
prices below their production costs, below the prices
charged in their home producers.
17. Why are Tariffs and Trade Barriers Used?
• Protection-as-bargaining-chip argument
This argument states that trade restrictions can be a
useful bargaining tool in trade negotiations with other
countries.
18. Why are Tariffs and Trade Barriers Used?
• Environmental and labor standards argument
Countries with lax environmental or labor laws have an
economic advantage over countries that must comply
with stricter laws.
