chapter 7 Flashcards
protectionism
the collective, governmental actions to influence international trade
tarrif
a tax placed on goods when they cross a country’s border. The main purpose of tariffs is to control trade by making foreign goods more expensive, which helps domestic industries compete.
specific duty tariff
- A fixed amount of tax charged per unit of a product.
- Example: $5 tax per pair of imported shoes.
ad valorem tariff
- A tax based on a percentage of the product’s value.
- Example: A 10% tax on an imported car that costs $20,000 ($2,000 tariff).
compound duty
- A combination of both a specific duty and an ad valorem tariff on the same product.
- Example: A $3 tariff per imported T-shirt plus 5% of its value.
import tariff
a tax imposed on goods brought into a country from abroad. These tariffs increase the price of imported goods, making them more expensive than locally made products unless foreign producers lower their prices to offset the tariff.
export tariff
An export tariff is a tax placed on goods leaving a country. Unlike import tariffs (which protect domestic industries),
subsidies
- Subsidies – Financial support from the government to domestic industries, making their products cheaper than foreign competitors.
- Example: The U.S. government subsidizes its agriculture industry, allowing American farmers to sell crops at lower prices than foreign competitors.
tied aid and loans
- Tied Aid and Loans – When a government gives financial aid or loans to another country with conditions that force the recipient to spend that money on the donor country’s products.
- Example: If the U.S. gives financial aid to a developing country but requires it to buy American-made machinery with that money.
quotas
A fixed limit on how much of a product can be imported/exported in a certain time period.
* Example: The U.S. might set a quota allowing only 1 million tons of foreign sugar to be imported per year to protect American sugar farmers.
embargoes
A complete ban on trade with a specific country, usually for political or security reasons.
* Example: The U.S. has an embargo on trade with North Korea, meaning American companies cannot legally import or export goods from there.
buy local legislation
Laws that encourage or require people to buy domestic products instead of imports.
* Example: The U.S. government has “Buy American” policies that require federal agencies to purchase American-made goods whenever possible.
standards and labels
countries set specific rules for product quality, safety, and labeling that favor domestic producers and make it harder for foreign goods to qualify.
* Example: The European Union has strict food safety standards that make it difficult for American beef (which often contains hormones) to be sold there.
licensing requirements
- Some governments require businesses to get special permits before they can import/export certain products. This can slow down trade and make it harder for foreign businesses to enter the market.
- Example: China requires foreign pharmaceutical companies to get approval before selling medicine, making it more difficult for non-Chinese drug manufacturers to compete.
administrative delays
- Slow processing times, excessive paperwork, and bureaucratic hurdles that make importing or exporting difficult and expensive.
- Example: A country might take months to approve import paperwork, forcing foreign businesses to pay extra costs for storing goods while waiting
restrictions on services
- some trade barriers apply to services instead of physical products. These can limit foreign companies’ access to certain industries like banking, transportation, insurance, or consulting.
- Example: Some countries restrict foreign airlines from operating domestic flights to protect their own airline industry.
