Jasz
VIP Contributor
The barriers to foreign trade are the factors that limit the flow of goods and services between countries. Many of these barriers exist because of government policies, but some also result from cultural differences. There are many barriers to foreign trade. Some of these barriers are government-imposed, others are voluntary.
Government-imposed barriers include tariffs, quotas and other import restrictions. Tariffs are the most common type of government-imposed trade barrier. No matter where a good is produced or consumed in the world, there will always be some importer who pays a higher tariff than he would have if he had bought from another country. Because of this, goods that would otherwise be traded across international borders are not traded.
Voluntary barriers include exchange controls and capital controls as well as restrictions on foreign investment in domestic markets. Exchange controls restrict the movement of money between countries; capital controls restrict the movement of goods and services among countries; and restrictions on foreign investment in domestic markets inhibit the flow of information between nations.
Government-imposed barriers include tariffs, quotas and other import restrictions. Tariffs are the most common type of government-imposed trade barrier. No matter where a good is produced or consumed in the world, there will always be some importer who pays a higher tariff than he would have if he had bought from another country. Because of this, goods that would otherwise be traded across international borders are not traded.
Voluntary barriers include exchange controls and capital controls as well as restrictions on foreign investment in domestic markets. Exchange controls restrict the movement of money between countries; capital controls restrict the movement of goods and services among countries; and restrictions on foreign investment in domestic markets inhibit the flow of information between nations.