3. TARIFF BARRIERS
• A Tariff is a tax.
• It adds to the cost of imported goods and is one of several trade
policies that a country can enact.
• The most important of tariff barriers is the customs duty
imposed by the importing country.
• A tax may also be imposed by the exporting country on its
exports. However, governments rarely impose tariff on exports,
because, countries want to sell as much as possible to other
countries
4. CONTD..
• Tariffs are often created to protect infant industries and developing
economies, but are also used by more advanced economies with
developed industries. Here are five of the top reasons tariffs are
used
Protecting Domestic Employment
Protecting Consumers
Infant Industries
National Security
Retaliation
5. CONTD..
• The benefits of tariffs are uneven.
• Unfortunately for consumers - both individual consumers and
businesses - higher import prices mean higher prices for
goods.
• In the long term, businesses may see a decline in efficiency due
to a lack of competition, and may also see a reduction in profits
due to the emergence of substitutes for their products.
6. PRICE WITHOUT THE INFLUENCE OF
TARIFF
DS
price
quantityQo Qw
P-
P
DD
Domestic
production imports
WS
7. PRICE WITH THE INFLUENCE OF
TARIFF
Ws + Tariff
price
quantity
Domestic
production
DD DS
imports
Qo Qw
P
1
P
+
WS
8. IMPORTANT TARIFF BARRIERS
• Specific Duty
• Ad valorem Duty
• Combined or Compound Duty
• Sliding Scale Duty
• Countervailing Duty
• Revenue Tariff
• Anti-dumping Duty
• Protective Tariff
9.
10. NON TARIFF BARRIERS
• Nontariff barriers are another way for an economy to control the
amount of trade that it conducts with another economy, either
for selfish or altruistic purposes. Non tariff barriers are mostly
imposed by developing countries.
• A non tariff barrier is any barrier other than a tariff, that raises
an obstacle to free flow of goods in overseas markets.
• Non-tariff barriers, do not affect the price of the imported
goods, but only the quantity of imports
• It includes quotas, embargoes, sanctions, levies
12. IMPORTANT NON TARIFF BARRIERS
Quota System
Product Standards
Domestic Content
Requirements
Product Labeling
Packaging Requirements
Consular Formalities
State Trading
Preferential Arrangements
Foreign Exchange
Regulations
license
13. EXAMPLES
New Zealand's apples account for a third of its agriculture
exports but have been banned from Australia since 1921 due to
fears about the spread of fire blight, a crop pest.
14. Philippine mangoes and bananas have to meet strict
phytosanitary requirements from the US and Australia.