What is Trade Barrier?

A trade barrier refers to a set of government-imposed policies to put restrictions on international trade. As a result, the flow of international goods and services will be affected.

Trade barriers include tariff barriers and non-tariff barriers, all seeking to make foreign goods more expensive or less available.

Tariff barriers refer to taxes on imports. They are used to lift the price of imported goods, making imports less competitive with domestic products. Tariffs are paid by domestic consumers, not the exporting country.

Non-tariff barriers often use other covert means to restrict imports, such as import quotas, embargoes and subsidies to domestic industry.

Import quotas mean limits on the certain goods that can be imported.

An embargo is the partial or complete prohibition of commerce and trade with a certain country, limiting or banning imports and exports.

Subsidies to domestic industry make goods cheaper to produce than in foreign markets. This results in a lower domestic price, which reduce imports and thus advance particular segments of an economy.