Chapter 18.3Cooperation and Trade Barriers

What are Trade Barriers?

Government actions that are designed to protect domestic industries and jobs from foreign competition.

While international trade allows people and nations to specialize in the production of goods and services, but because of a variety of factors, nations restrict the free exchange of goods across international borders.

Trade Barriers

The major types of trade barriers are: tariffs, import quotas voluntary restrictions, and embargoes.

Trade Barriers-Tariffs

There are two kinds of tariffs, revenue tariffs, which raise money for the government, or protective tariffs, which restrict the number of foreign goods sold in a country. Revenue tariffs were a major source of income until the early 1900s. Protective tariffs favor domestic industries rather than foreign by increasing the prices of imported goods.

Trade Barriers-Import Quotas & Voluntary Restrictions

Intended to help domestic businesses sell products by limiting the quantity of a specific product that can be imported.Import Quotas: Sets a fixed amount of an item that can

be imported, is a law.

Voluntary Restrictions

A binding agreement between the U.S. and another nation that does not require congressional action and legislation.

They are usually directed at specific goods from specific nations. They help domestic companies profit more because of less foreign competition.

Trade Barriers-Embargoes

A law that simply cuts off imports from, and exports to a specific country. Maybe because the U.S. does not get along with a certain country or because they are trying to stop a country from doing a certain act.

Free Trade

International trade that is not subject to government regulations

Supporters believe that exports and imports should flow freely between nations

Protectionism

The use of protective tariffs between nations to favor domestic industries

Free Trade Vs. Protectionism

Some people believe in free trade.. Some believe in protectionism. These two groups argue a lot and their arguments are based on infant industries, job protection, standard of living, specialization, national security, and fairness.

International Cooperation

Many countries have engaged in international cooperation. Examples of this are reciprocal trade agreements, regional trade organizations, and international trade agreements. These were all created by countries wanting to make money internationally.

Questions you should to able to answer

1) What are the 3 trade barriers?2) What are the 2 kinds of tariffs?3) Which trade barrier cuts off imports

and exports from a foreign country?4) What are three of the subjects which

arguments between free trade and protectionism based on?

5) Why do many countries agree with international cooperation?