How tariffs and non-tariff barriers affect international trade?
Answers
Non-tariff barriers to trade or sometimes called "Non-Tariff Measures " are trade barriers that restrict imports or exports of goods or services through mechanisms other than the simple imposition of tariffs.
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Trade barriers come in many forms. Quota is one. This is when a country sets a limit to the imported products. This is done for a number of reasons. One is because the government of the importing country wants to protect its domestic manufacturers. Other barriers or limitations are added costs such as tariffs, duties, and taxes.
In this way, trade barriers can affect international trade by preventing the flow of goods from producers to consumers. Where quotas, tariffs, and duties prevent this flow, it impacts the productivity of the producers, although these will usually seek other markets without these barriers.
Without net exports, a country cannot remain a consumer of other countries’ goods without incurring large debts through the imbalance of trade. It is usually economically beneficial to all parties to maximize the production of their industries, through open markets to a wide consumer base.
Countries in order to protect their economies apply methods of restrictions such as tariffs, quotas, subsidies and exchange controls. By applying protectionism a country can gain from it in such as protecting infant industries, dumping and protecting manufacturing industries, but on the other hand can also have problems such as firms remaining inefficient, retaliation, and misallocation of resources, and related directly to international trade countries benefit on comparative and absolute advantage, and economies of scales it affects the international trade.