Trade and Trade Restrictions

Domestic Markets

• Markets in the Home Country

• International Trade Zones

• Global Marketplaces

• Foreign Exchange Markets

Licenses

• License to import or export goods

• License to operate a vehicle

• License to practice medicine

• License to conduct business

Strategic industries

• Industries that are not important for the economy

• Industries considered very important for the country's economy or safety, e.g., aircraft manufacturing, steel production, weapons, agriculture.

• Industries that only focus on entertainment

• Industries that are solely based on technology

Exports

• Goods & Services sold in foreign markets

• Products purchased from foreign countries

• Local goods sold to domestic consumers

• Services provided to local businesses

Trade Restrictions

• Tariff

• Tax Incentives

• Trade Agreements

• Market Expansion

Benefit of Tariff

• Helps domestic producers sell at higher prices; revenue goes to Domestic Government

• Increases competition from foreign producers

• Reduces prices for consumers

• Encourages imports of foreign goods

Subsidies

• Government taxes on imports to protect domestic industries.

• Financial assistance provided by the government to encourage exports.

• A type of tariff imposed on foreign goods.

• A regulation that limits the amount of goods that can be exported.

Benefit of Standards

• A major form of trade restriction & used in different amounts by many countries

• A method to increase production efficiency

• A way to reduce environmental impact

• A strategy for improving customer satisfaction

Effect of Quota

• Creates a shortage of the good

• Increases the supply of the good

• Stabilizes market prices

• Encourages competition among producers

Why Trade Restrictions Used

• To protect their own industry

• To increase competition

• To lower prices for consumers

• To promote international cooperation