What is the impact of trade barriers on

international trade?

• The effects of trade barriers can obstruct free

trade, favor rich countries, limit choice of
products, raise prices, lower net income, reduce
employment, and lower economic output. 
The difference between quotas and tariffs
• Quotas restrict the quantity of a good
imported from another country. Tariffs are a
charge levied on the value of goods
imported from another country.
Understanding Tariffs
• Tariffs are used to restrict imports. Simply put, they increase the price
of goods and services purchased from another country, making them
less attractive to domestic consumers.
• A key point to understand is that a tariff affects the exporting country
because consumers in the country that imposed the tariff might shy
away from imports due to the price increase.
• However, if the consumer still chooses the imported product, then
the tariff has essentially raised the cost to the consumer in another
country.
There are two types of tariffs:

• A specific tariff is levied as a fixed fee based

on the type of item, such as a $500 tariff on
a car.
• An ad-valorem tariff is levied based on the
item's value, such as 5% of an import's
value.
Why Governments Impose Tariffs
Governments may impose tariffs for several reasons:
• Raise revenues
• Tariffs can be used to raise revenues for governments.

• Protect domestic industries

• Governments can use tariffs to benefit particular industries, often doing so to protect
companies and jobs.

• Protect domestic consumers

• By making foreign-produced goods more expensive, tariffs can make domestically
produced alternatives seem more attractive.
• Tariffs can make these products so expensive that consumers won't buy them.
QUOTA – INTERNATIONAL TRADE
• Quotas are trade restrictions that can limit
either the total value of a good or the
number of units of a good that a nation can
import.