Tariff
barriers
|
Non-tariff
barriers
|
The
trade between countries can be limited by imposing tariff. A tariff is a tax
on imports or exports. Tariffs are customs duties (tax) charged on imported or
exported goods.
|
Non-tariff
barriers are all trade barriers that restrict international trade, but in a
form other than tariffs.
|
Examples
of tariff barriers to trade:
-Manufactured
goods from LEDCs to the EU face a tariff of 30%.
-The
European Union may place a tariff on imported beef from the United States if
it thinks that the goods could be infected with a disease.
Japanese
companies have located in the European Union to avoid tariffs, the EU do not
apply duties if 60% of the components are made in Europe.
|
Examples
of non-tariff barriers to trade:
-Import
licenses
-Export
licenses
-Import
quotas
-Subsidies
-Embargo
-Local
content requirements
-Currency
devaluation
|
Why are
tariffs and trade barriers used?
Tariffs
are often created to protect the domestic industries and developing economies,
but are also used by more advanced economies with developed industries.
Who benefits?
The
benefits of tariffs are uneven. Because a tariff is a tax, the government will
see increased revenue as imports enter the domestic market. Domestic industries
also benefit from a reduction in competition, since import prices are
artificially inflated. Unfortunately for consumers - both individual consumers
and businesses - higher import prices mean higher prices for goods.
