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 What are Trade Barriers? 
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Joined: Fri Sep 24, 2010 12:08 pm
Posts: 72
Location: uk
Post What are Trade Barriers?
Tariffs are a fairly common form of trade barriers, and are essentially taxes on goods as they cross the borders of a nation. Tariffs nearly always are placed on goods that are brought into the country, as opposed to goods sold as exports, although in some cases they may go both ways. Historically, tariffs were a large source of government revenue, as they could easily be collected as a tax on ships as they landed in the nation.

Tariffs, like most trade barriers, may be imposed for different reasons. Some tariffs are placed simply to earn money for the government. This might either be a flat fee on an item, or it might be based on the market value of the item. Other tariffs exist as a form of protectionism, to make imported goods more expensive than they might otherwise be, in order to protect domestic industries. For example, if a country has a fairly high wage, and high labor standards, the cost of producing a single widget might be around ten units. If a nearby country can produce a widget for three units, then imports of that country’s widgets could easily drive the domestic industry out of business. So the country might place a restrictive tariff on widget imports, to make sure that domestic widgets always remained competitively priced, or even to make it unfeasible for widgets to be imported at all.

Sat Sep 25, 2010 2:17 pm
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