Adam El Masmoudi Garcia
M2
Trade barriers are measures that governments or public authorities introduce to make
imported goods or services less competitive than locally produced goods and services.
Different types of Trade Barriers:
Tariff - 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. Tariffs are often created to protect infant industries and
developing economies but are also used by more advanced economies with developed
industries. An example would be the tariff imposed by the US. The business that
imports or produces the foreign product must pay the tax to the US government. The
tariff revenue goes directly to the US treasury.
Quota – It’s a limit on the number of goods that can be imported. Putting a quota on a
good, creates a shortage which causes the price of the good to rise and allows domestic
producers to raise their prices and expand their production. An example would be
Germany, they imported 2 million tons of steel from France every year, but Germany
now imports only 1 million tons of steel from France, but they still use around 3 tons of
steel a year, as they’ve put a quota on steel. France would do this to Germany to
generate more income from their production and limit the amount of steel Germany can
import from them, and therefore expand their production and get more capital from it.
Embargo – An embargo stops exports or imports of a product or group of products.
Sometimes, it is stopped the trade, usually for political reasons. An example would be
Spain, which last year had some political disagreements with Greece and no Greek ships
are allowed in Spanish ports.
Subsidies – Subsidies make goods cheaper to produce than in foreign markets. This
results in a lower domestic price. Both tariffs and subsidies raise the price of foreign
goods relative to domestic goods, which reduces imports.
See Appendix 1
M2
Trade barriers are measures that governments or public authorities introduce to make
imported goods or services less competitive than locally produced goods and services.
Different types of Trade Barriers:
Tariff - 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. Tariffs are often created to protect infant industries and
developing economies but are also used by more advanced economies with developed
industries. An example would be the tariff imposed by the US. The business that
imports or produces the foreign product must pay the tax to the US government. The
tariff revenue goes directly to the US treasury.
Quota – It’s a limit on the number of goods that can be imported. Putting a quota on a
good, creates a shortage which causes the price of the good to rise and allows domestic
producers to raise their prices and expand their production. An example would be
Germany, they imported 2 million tons of steel from France every year, but Germany
now imports only 1 million tons of steel from France, but they still use around 3 tons of
steel a year, as they’ve put a quota on steel. France would do this to Germany to
generate more income from their production and limit the amount of steel Germany can
import from them, and therefore expand their production and get more capital from it.
Embargo – An embargo stops exports or imports of a product or group of products.
Sometimes, it is stopped the trade, usually for political reasons. An example would be
Spain, which last year had some political disagreements with Greece and no Greek ships
are allowed in Spanish ports.
Subsidies – Subsidies make goods cheaper to produce than in foreign markets. This
results in a lower domestic price. Both tariffs and subsidies raise the price of foreign
goods relative to domestic goods, which reduces imports.
See Appendix 1
