16 Examples of Trade Barriers

John Spacey, May 23, 2021

Trade barriers are government policies that are designed to reduce international trade. The following are common types of trade barriers.

Tariffs

A tax imposed on the import and export of goods. This is often paid by the firms involved such that this tax is hidden from consumers.

Subsidies

Subsidies are payments by a government to the producer of a good. For example, a government that gives farmers financial incentives to produce corn. These aren't technically trade barriers as they are often designed to promote exports. However, subsidies massively complicate global trade as they provide a justification for trade barriers.

Countervailing Duties

A tariff that is designed to counteract the effect of subsidies.

Antidumping Duties

A tariff that is designed to counteract dumping whereby a foreign government or firm sells things at aggressive prices to try to increase market share or establish a global monopoly.

Standards

The implementation of national product standards with a certification process that is cumbersome for foreign firms. Includes a failure to recognize international standards and the equivalent standards of other nations.

Regulations

As with standards, regulations can be designed to discourage imports as foreign producers will may find it more difficult to comply with local regulations. This causes international trade organizations and agreements to come into conflict with the sovereign right of nations to define their own laws. Indeed large corporate interests may try to use trade agreements to suppress regulations in areas such as consumer protection, health, safety and environmental stewardship. This tends to make international trade a complex and controversial issue.

Local Content Requirements

Laws that require certain industries to procure local content. For example, a law designed to protect national culture by requiring movie theatres to feature a minimum percentage of domestic films. These laws were historically used to protect local culture by limiting the Americanization of local media. However, this term is now widely used to describe a broad range of buy-local procurement laws.

Buy-National Regulations

Regulations that require government agencies or certain industries to try to procure local products and services.

Import Quota

A limit on the amount of imports in a period of time. For example, a nation that limits the number of cars that can be imported from a trading partner each month.

Exchange Controls

Government restrictions on foreign currency exchange.

Currency Devaluation

Creating money or using exchange controls to make your currency cheaper to boost exports.

Embargo

A government order that restricts or prohibits commercial transactions with a foreign nation. This is typically due to serious political disputes and conflict.

Sanctions

Sanctions are commercial and financial penalties imposed against a foreign state, firm, organization, group or individual. This often includes elements that resemble trade barriers such as ban on certain imports from a nation or firm.

Import Licenses

Restricting who can import goods and potentially exerting effective control over these firms to manage trade.

Export Control

Laws, regulations and licenses that restrict the export of certain goods such as critical technologies or information services. This is often done for the purposes of foreign policy and national security.

Voluntary Export Restraint

A government that agrees to limit some type of export for a period of time. Often this is an agreement to prevent tariffs where there is perceived dumping or subsidies are in place. For example, a nation that agrees to limit the number of solar panels it will export to another nation for a period of 5 years. This nation will then require export visas to its firms to limit exports.