Trade barriers refer to restrictions imposed when goods

move between countries. The barriers are imposed on

both the imports and exports.
Used to encourage and protect existing domestic
industry
Trade barriers are Tariffs that
Increase Trade
Weaken Trade
Restrict Trade
Quotas
Boycotts and Embargoes

Impact of Tariff (Tax) Barriers
Tariff Barriers tend to Increase:
1. Inflationary pressures
2. Special interests privileges
3. Government control and political considerations in
economic matters
4. The number of tariffs they beget via reciprocity
Tariff Barriers tend to Weaken:
1. Balance-of-payments positions
2. Supply-and-demand patterns
3. International relations (they can start trade wars)
The protection may come with an economic cost since consumers will have to
pay an expensive price when purchasing imported goods. This lowers
consumers buying power and may lead to inefficient allocation of resources.
But in domestics markets it can
Tariffs have significantly reduced over the last twenty years in global trade.
WTO has significantly being instrumental in reducing tariffs, but countries still
pursue protectionism.
Countries uses legal barriers, exchange
barriers, psychological barriers to restrain
unwanted goods into the country.
Countless reasons- Protect infant industry,
home market, need to keep money at home,
capital accumulation, std of living and wages
maintenance, natural resources protection,
protect employments opportunities, national
defense, retaliation.
After effects in home country- leads to
industrial inefficiencies and non-adjustment to
world industry situations and standards
The consumers ultimately bears the cost.-
hidden tax that consumers unknowingly pay!.
US Sugar and Textiles-$1,70,000/year(6
times!!)
US Steel-$8,35,351 each for 1239 workers!!!
After effects between countries-
Tariffs wars!.-Eg.EU-US-Pasta War!
Quotas!