MRS. GRIFFITH'S - #2 ECONOMY -TRADE BARRIERS: Tariff, Quota, and Embargo

QUOTA

A limit placed on the quantities of a product that can be imported.

TARIFF

A tax on imported goods.

WHY AN EMBARGO?

An embargo is usually created as a result of unfavorable political or economic circumstances between nations. An embargo is designed to isolate a country and create difficulties for its governing body forcing it to act on the issue that led to the embargo.

EMBARGO

An official government ban on trade or other commercial activity with a particular country.

IMPACT OF EMBARGOS ON WORLD TRADE

Businesses and their investors on both sides of the border are the ones who absorb the losses, which can run into millions or billions of dollars and losses.

FREE TRADE

Nothing hinders or gets iN the way of two nations trading with each other.

EXPORT

Goods and services SOLD TO other countries.

IMPORT

Goods and services bought FROM OTHER countries.

EFFECT OF TARIFFS

Increases prices of goods and may cause political tension.

TRADE BARRIER

Restrictions on trade because they want to produce and sell their own goods

EFFECT OF QUOTAS ON WORLD TRADE

The import quotas can have various effects: price, how much of the product is made (supply), how much is consumed (purchased), how much is earned (profit) off of the product, and others.

EFFECT OF TARIFFS ON WORLD TRADE

Trade barriers such as tariffs raise prices and reduce available quantities of goods and services for businesses and consumers, which results in lower income, reduced employment, and lower economic output.