Essay On Trade Barriers

WHAT ARE TRADE BARRIERS?

Trade barriers are instruments used by the government to restrict the free flow of international trade. They are fairly simple to understand and most of them follow the same principle: it raises the price of the good being traded which makes certain goods cheaper for the buyer who then switches from the expensive to the less expensive good.

Trade barriers are most commonly imposed on agricultural goods. Manufactured goods like footwear, clothing and textiles are protected by the imposition of trade barriers.

As observed in the last two decades, the use of tariffs has been declining in large and developed countries only to be replaced by non-tariff barriers. These barriers refer to varying standards and regulations being imposed on trade. Domestic firms use lobbying techniques to get regulations into motion that would effectively keep out foreign competition and make them more profitable.

The continuous imposition of trade barriers between two or more countries leads to a trade war between them. However, barriers on trade are not only heavily frowned upon because of their adverse effects on international relations but also due to them playing a

Dumping is a predatory pricing technique that can be a cause of concern for domestic and local firms because foreign competitors unload their excess production at very minimal prices in international markets. If a good is sold as export for less than their original value then it is considered a dumped good. In the short-run, domestic consumers benefit from this practice because of the lower prices for foreign goods but in the longer-run, it proves very harmful for domestic industries who are forced out of business because of the persistent undercutting of domestic prices by a foreign company who then establishes itself as a monopoly power in that sector. When there is no competition left, the firm will increase the prices to exploit the