Tariff and Non-tariff barriers are an important intervention of the government in the trade activities for limiting or banning certain imports. This is done for several reasons and may hurt companies trying to export to a country with such barriers in place. But what exactly are these barriers and how are they imposed? To know more, read on.
Tariff Barriers This is a tax levied on goods that are imported from other countries and its collection takes place at the arrival of goods at the ports. Also called Excise Duty, such tariffs are mainly imposed to encourage local production and the revenue increases subsequently. But this may cause a heavy loss for the consumers who have to buy the imported goods at inflated prices and even the exporters who have to deal with countries that have high tariff barriers. In such cases, the exporter could choose to do business with countries that give them the advantage of lower costs on paying such taxes. Sill the idea of the government is to ensure that consumers stick more to goods manufactured in the country and thus, protect the associated jobs at the domestic level as well.
Non-Tariff Barriers These constitute all the other barriers that do not involve tariffs. The purpose for imposing such barriers is the same except for the fact that no revenues are raised for the host country. The major barriers of this type include:
Economic targets that are thought to be achieved by such barriers include:
But despite such advantages for a country with the barriers in place, the national economy suffers a lot over time. While on one hand it decreases the sense of competitiveness among the domestic companies, on the other hand it is harmful for the consumers as well who may have to compromise of the quality and the choice. Organizations like the WTO, EU, or NAFTA are working towards lowering such barriers but exporters around the world are still advised to work with those countries that encourage imports.
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