Economics Trade Barriers Questions
Tariff and non-tariff trade barriers are both measures implemented by governments to restrict international trade, but they differ in their nature and impact.
A tariff is a tax or duty imposed on imported goods, making them more expensive and less competitive in the domestic market. Tariffs are usually levied as a percentage of the value of the imported goods and are collected by customs authorities. The purpose of tariffs is to protect domestic industries, generate revenue for the government, and regulate trade flows. Tariffs can be specific (fixed amount per unit) or ad valorem (percentage of the value).
On the other hand, non-tariff trade barriers refer to various measures that restrict trade without involving the imposition of a tax or duty. These barriers can take different forms, such as quotas, embargoes, licensing requirements, technical standards, subsidies, and administrative procedures. Non-tariff barriers aim to protect domestic industries, ensure product safety and quality, safeguard national security, or address environmental or health concerns. Unlike tariffs, non-tariff barriers do not directly increase the cost of imported goods but can still hinder trade by imposing restrictions or additional requirements.
In summary, the main difference between tariff and non-tariff trade barriers lies in their form and impact. Tariffs are taxes imposed on imported goods, while non-tariff barriers encompass a broader range of measures that restrict trade without involving taxes.