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What is a Trade Barrier?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 13 September 2016
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Trade barriers are constraints that tend to hinder the motivation to engage in the importing or exporting of goods. The most common examples of a trade barrier are government imposed economic barriers such as tariffs or quotas. Depending on the type of trade barrier imposed, various industries may be discouraged from offering their goods and services for sale on international markets, or refrain from purchasing international products for sale within the country.

A trade barrier usually creates some type of financial burden that raises the cost of either exporting or important goods. For example, a tariff on imports would discourage businesses from choosing goods produced outside the country while increasing the potential for selling domestically produced goods instead. At the same time, imposing a quota on the number of goods and services that can be exported could encourage businesses to cultivate an increased consumer base within the country and thus keep more consumer dollars within the economy of the nation.

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While at first glance a trade barrier may seem like a negative approach, many countries impose some type of exchange controls in order to attempt to create a trade balance. That is, tariffs and quotas may be employed to structure a balance between imports and exports so that the nation derives the most benefit from each trade action. Because global trade is common today, a trade barrier can function as a regulatory measure that will prevent the economy of any one nation from becoming too dependent on domestic or international business. The goal today is to strike an equitable balance in world trade that is positive for each country while also benefiting overall world economy.

Along with tariffs and quotas, there is another group of trade barrier strategies that are known as non-tariff barriers. These are often temporary injunctions that are aimed at correcting a rising rate of unemployment or temporarily imposing sanctions during a period of political dispute between one or more countries. A non-tariff trade barrier may be put in place to protest a tariff or quota set by another country, or simply as a measure to protect domestic industries during a period where a natural disaster or some other unforeseen factor threatens to undermine the business infrastructure within the country.

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Discuss this Article

anon297480
Post 3

Name two other barriers to trade that governments can impose on imported goods. Does anyone have an answer for this?

Clairdelune
Post 2

I agree with the author where he talks about exchange controls used to produce a trade balance. If I understand the information correctly, the goal is for countries to

have near equal exports and imports. Having trade barriers should help to reach that goal. And, hopefully, this will benefit trade around the world. This is a good thing!

PinkLady4
Post 1

Some of you may remember the Cuban Trade Embargo being put into effect. It all started with a revolution by Fidel Castro. He took over the country of Cuba and started a communist government. The United States didn't like him at all and tried to kick him out. But, they failed.

The U.S. government was very nervous about having a communist country so close - it was only 90 miles from the United States.

Finally, the government put a trade embargo on Cuba. This was a complete trade barrier - no importing and no exporting.

This trade barrier or embargo is still in effect after 50 years.

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