An efficient carmaker, for example, may ask for limits of foreign imports, hoping to keep its price high without improving the quality of its products. In the end , however , other countries may retaliate with trade restrictions of their own. Consumers and businesses in both countries are then forced to buy poorly made and expensive domestic products. Trade restrictions might protect a few jobs in inefficient industries,but the whole economy often suffers by becoming less competitive in the international markets.
The most common tools for limiting imports of foreign goods and services are quotas, tariffs,and subsidies. When a country imposes a quota, it limits the quantity of certain foreign products that can be imported. A tariff is a tax placed on goods entering a country , raising the price of imported goods. A government can also use the taxpayers' money to provide a subsidy to local producers , making the price of local goods artificially lower than imported goods.
Trade barriers, like walls between feuding neighbors, are usually imposed unilaterally by one country acting on its own to limit the amount of foreign products available to local producer from foreign competition and allow them time to improve their products or lower their prices as long as they are protected from foreign competition by trade barriers.
Although trade restrictions are of dubious economic value, they have been shown to be effective in bringing about political or social change. The refusal of countries to trade and do business with South Africa, for example, was widely seen to be responsible for the decision to dismantle the system of apartheid. Trade blockades can be useful in forcing countries to change policies that violate human rights or international treaties, but as long as a sufficient number of countries join in the blockade to make it effective.
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