Chapter 17.2 Notes Barriers to International Trade

I.2 ways countries restrict each other from trading: A. Tariffs- taxes on products sold in your country that came from another country (imports) 1. Protective Tariff- make import more expensive than domestic/ home companies. Used to make money and protect.

2. Revenue Tariff- don’t necessarily make import more expensive than domestic/ home company. Used to raise money. B. Quotas- limit amount that can be sold in your country 1. More effective cause you can set it to zero. II.4 reasons why Protectionists want to restrict trade. A. National Defense- our reliance on others may limit our options

B. Protect U.S. infant industries/ new companies C. Protect jobs here (most common) D. keep money spent here E. eliminate trade deficit III. 4 agreements by countries encouraging trade: A. Reciprocal Trade Agreement Act- reduced tariffs 50% if others agree. B. GATT/WTO = 100 countries agreeing to limit tariffs

C. NAFTA = free trade agreement between U.S., Canada, and Mexico D. CAFTA = free trade agreement between U.S. and Central American countries.