Trade Balance and Trade Barriers By Ben Quick

Balance of Trade Trade Balance – the value of exports minus the value of imports (measured in terms of goods). Trade Deficit – when a nation imports more than it exports.

Barriers to Trade Sometimes governments feel that they need to limit the amount of trade they have with a particular country. Types of Trade Barriers include: 1. quotas 2. embargoes 3. standards 4. tariffs 5. subsidies

Barriers To Trade (cont) Countries enact trade barriers to protect Oligopolistic Interests.

Quotas - Specific limit to the amount of a product a foreign nation can import. Lessens the number of products that compete with homeland companies. The U.S. has a quota on sugar from Brazil in order to protect domestic sugar producers

Embargoes the refusal to trade with a nation. Can cause shortages and high prices for affected products.

Standards or Subsidies Standards – product requirements that make foreign products more expensive. Subsidies - type of financial government assistance, such as a grant, tax break, or trade barrier, in order to encourage the production or purchase of a good.

Tariffs Tax on Imports. Increases the price of other nation’s goods. Homeland companies will have an advantage.

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