Trade Barriers

Essential Question How do trade barriers keep voluntary trade from occurring between countries?

Candy Sale Who wants some candy? Raise your hand.

How Much? Today, I’m running a special. I paid about 5 cents a piece for the candy. I have to charge you a tax. So I’ll sell to you for 25 cents. Who still wants some? Why not?

How Many? Okay, I’ll sell it for 5 cents a piece. Who wants some now? Oops! I forgot to tell you, I’m only allowed to sell 5 pieces. After 5 pieces, I can’t sell anymore.

To Whom? Okay, who still wants some? I can’t sell candy to anyone whose first or last name begins with C. If your first or last name begins with “C” then I refuse to sell you candy. Sorry!

Trade Barriers Trade barriers keep products from being bought and sold between countries. They “hinder” (stop, or slow down) global trade. There are 3 major types of trade barriers: Tariffs Quotas Embargos

Tariffs Tariffs are taxes charged for goods that enter a country. In order to get a product from another country, you have to pay extra for it. Not the same tax as the taxes you pay in the store. Think of how many goods the United States imports. How do you think tariffs might affect the economy? How do you think this affects world trade?

Quotas A quota is when a country limits the amount or quantity of a product that can be imported. EX: A country might limit the amount of sugar purchased from other countries to 50 tons per year. What happens when a country has already bought their entire quota? How do you think this affects world trade?

Embargoes An embargo is when one country refuses to enter into trade with another country. EX: We used to have an embargo with the Soviet Union. EX: We’ve had an embargo with Cuba for close to 50 years. This is usually done between two countries that don’t like each other. How do you think this affects world trade?

Summary Questions Name and describe 3 types of trade barriers. What are the costs (-) and benefits (+) of trade barriers?

What Trade Barrier is being Described? Today, I’m running a special. I paid about 5 cents a piece for the candy. I have to charge you a tax. So I’ll sell to you for 25 cents. Who still wants some? Why not?

What Trade Barrier is being Described? Okay, I’ll sell it for 5 cents a piece. Who wants some now? Oops! I forgot to tell you, I’m only allowed to sell 5 pieces.

What Trade Barrier is being Described? Okay, who still wants some? I can’t sell candy to anyone whose first or last name begins with C. If your first or last name begins with C then I refuse to sell you candy. Sorry!