Witch of the following is an example of a trade barrier
- Tariff Barriers. These are taxes on certain imports. They raise the price of imported goods making imports less competitive.
- Non-Tariff Barriers. These involve rules and regulations which make trade more difficult. For example, if foreign companies have to adhere to complex manufacturing laws it can be difficult to trade.
- Quotas. A limit placed on the number of imports
- Voluntary Export Restraint (VER). Similar to quotas, this is where countries agree to limit the number of imports. This was used by the US for imports of Japanese cars.
- Subsidies. A domestic subsidy from government can give the local firm a competitive advantage.
- Embargo. A complete ban on imports from a certain country. E.g. US embargo with Cuba.
Real Life Examples:
- Chinese import tariffs. This link shows that China is reducing its import tariffs on luxury foreign goods such as Scottish Whiskey from 10% to 5%. It is a sign the Chinese government want to encourage consumer spending. BBC – China cuts import tariffs
- 50% tariff on imports of washing machines. The US Trade body has recommended tariffs of 50% on imports of washing machines – especially from South Korean manufacturers IG and Samsung. The Trade body is concerned IG are selling washing machines below cost and dumping surplus supply on the US market. US manufacturer Whirlpool brought the case.
- Custom duties post-Brexit. If the UK leaves the Single Market as part of Brexit process there will be custom forms and regulations to meet on exports and imports. These rules and regulations provide a significant barrier to trade.
- Quotas on low-tariff food. The EU has a quota for allowing a certain number of food items to enter without attracting tariffs.
- VER. In 1981, the US implemented a 1981 voluntary restraint agreement limited the Japanese to exporting 1.68 million cars to the U.S. per year. This limited the import of cars, though ironically made it more profitable for Japanese exporters. With a limit on the quantity, they could increase prices. Another consequence of this is that Japanese firms began assembling cars in the US and entering into partnerships with American car companies to get around the export restrictions.
- Subsidies. The EU gives €39 billion to farmers in direct subsidies. Indirectly, this makes EU agricultural exports more competitive and gives EU farmers an advantage in trade.
- Embargoes are usually implemented for political reasons. After Fidel Castro came to power, the US imposed a trade embargo on Cuba, which was strictly enforced.
Sorry if this is too much info but I hope this helps :)
To determine which of the following options is an example of a trade barrier, we need to understand what a trade barrier is.
A trade barrier is any government-imposed restriction or policy that limits international trade. It can take various forms and is employed to protect domestic industries, control the flow of goods and services, or address political or economic goals.
Now, let's consider the following options to identify the example of a trade barrier:
1. Tariffs: Tariffs are taxes or duties imposed on imported goods, making them more expensive and less competitive in the domestic market. This increases the cost for foreign producers and can serve as a trade barrier.
2. Free trade agreements: Free trade agreements are agreements between countries that aim to reduce or eliminate trade barriers, such as tariffs or quotas. Therefore, free trade agreements promote trade rather than act as barriers.
3. Market-based exchange rates: Market-based exchange rates refer to the currency exchange rates that are determined by supply and demand in the foreign exchange market. While they can impact international trade, they are not considered a trade barrier.
4. Export subsidies: Export subsidies are monetary assistance given by the government to domestic producers to encourage them to sell their goods and services in international markets. While they can distort competition and affect international trade, they are not considered trade barriers themselves.
Based on the above analysis, option 1, "Tariffs," is an example of a trade barrier.