International Trade
BA Course
UCL, SSEES
Lecture 8: Instruments of Trade Policy
Idil Uz Akdogan
,Preview
• Partial equilibrium analysis of tariffs in a single
industry: supply, demand, and trade
• Costs and benefits of tariffs
• Export subsidies
• Import quotas
• Voluntary export restraints
• Local content requirements
,Types of Tariffs
• A tariff is a tax levied when a good is imported.
• A specific tariff is levied as a fixed charge for each unit of
imported goods.
• For example, $3 per barrel of oil.
• An ad valorem tariff is levied as a fraction of the value of
imported goods.
• For example, 25% tariff on the value of imported
trucks.
, Supply, Demand, and Trade in a Single Industry
• Consider how a tariff affects a single market, say that of whe
• Suppose that in the absence of trade the price of wheat is
higher in Home than it is in Foreign.
• With trade, wheat will be shipped from Foreign to Home until
price difference is eliminated.
BA Course
UCL, SSEES
Lecture 8: Instruments of Trade Policy
Idil Uz Akdogan
,Preview
• Partial equilibrium analysis of tariffs in a single
industry: supply, demand, and trade
• Costs and benefits of tariffs
• Export subsidies
• Import quotas
• Voluntary export restraints
• Local content requirements
,Types of Tariffs
• A tariff is a tax levied when a good is imported.
• A specific tariff is levied as a fixed charge for each unit of
imported goods.
• For example, $3 per barrel of oil.
• An ad valorem tariff is levied as a fraction of the value of
imported goods.
• For example, 25% tariff on the value of imported
trucks.
, Supply, Demand, and Trade in a Single Industry
• Consider how a tariff affects a single market, say that of whe
• Suppose that in the absence of trade the price of wheat is
higher in Home than it is in Foreign.
• With trade, wheat will be shipped from Foreign to Home until
price difference is eliminated.
