Effects of Trade Barriers on International Trade

Sample Essay on Effects of Trade Barriers on International Trade

Trade barriers are often induced by governments and they come in varying forms. Barriers are set by countries in order to set limits on imported goods and this is carried out due to a number of reasons such as the interest of the country to protect its domestic manufacturers.

There are other limitations and barriers which are added to the costs like duties, taxes and tariffs. In this manner, trade barriers affect international trade through prevention of goods flow from the producers to the customers.

Where tariffs, duties and quotas prevent flow, the productivity of producers is affected though they can opt to seek markets in regions that don’t have barriers. If a country does not have any net exports, it cannot retain its position as a consumer of goods from other countries as this means that it will incur high debts in the form of imbalance of trade.

Countries that impose trade barriers also find that it is increasingly difficult to carry out trade with countries where they have set up the barriers. In cases where there are several trade barriers, trade does not take place and the prices of goods often become too high for import or export. Whenever this happens, domestic producers are forced to increase their mass production level or alternatively decrease or reduce their prices so they can meet the domestic demand though they might not be in a position to export their goods.

It is precisely because of these reasons that economists generally agree free trade is far better for economies and that history has proven countries that don’t have many trade barriers are likely to enjoy high levels of economic growth. What is more, once a country decides to implement trade barriers on other countries, it is likely that they will experience retaliation from those countries.

There are some positive aspects associated with trade barriers however. For instance, if a country has invested in a new industry it needs time to develop it and ensure that it gains competitive advantage. Giving it time to grow and develop is important and the only way to achieve this is by subsidizing that industry. However, this might lead to subsidies reliance in that industry. Korea is a good example of a country that imposed trade barriers on its technology industry in order to give it time to grow and gain the footing that is needed to compare with international markets.

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