4.1.4 Protectionism

Protectionism

trade between countries is restricted in some way - normally through measures to reduce the number of imports coming into a country

types

tariffs

quotas

non-tariff barriers

Tariffs

a tax on a good coming into a country

increases price of good and makes it less competitive

reduces demand for imports

encourages demand for home-produced subs

rises revenue for government

There is an inward shift in demand when tariffs are place on a product - so there is less supply

Quotas

Physical restriction in the number of goods coming into a country

restricts actual quantity of import allowed into a country

raises price of imports

encourages demand for domestically made subs

quota

Non-tariff barriers

any method not covered by a tariff, most usually: rules, regulations, legislation, extracting standard or specifications

reasons for

protect domestic industries

protect domestic employment

political pressures

protect cultures

prevent dumping

dumping

selling goods in the destination country below cost to break into that market