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Definition of Trade Barrier

Trade Barrier

A trade barrier refers to any particular type of impedance or restriction that is placed on international trade activity. Typically speaking, trade barriers will usually be in the form of administrative implementations and legislation which will restrict a particular aspect of international trade.

This can range from the type of merchandise or service that is being traded to even certain countries that are not allowed to trade with others.

Trade barriers will come in variety of forms, which include licenses, import quotas, tariffs, taxes, and embargo. However, most trader barriers will all usually result in the same situation, where the prices on a particular trade product are raised beyond what the product is actually worth.

This will result in people paying more for that particular product once it reaches the market. A trade barrier of this sort can be done for a variety of reasons, one being a country seeking to stimulate its own domestic economy by promoting exportation and limiting imports.

Generally speaking, most experts would agree that a trade barrier of any kind will usually have a negative impact on both international trade and the overall economy. Trade barriers may often prove not only to hurt trade on the international level, but also the industry on which a particular trade barrier is placed.

An example could be agricultural products that are taxed. A tax barrier such as taxation of food imports can lead to overproduction and lowering prices for such products. This would have a detrimental impact on farmers producing such goods.

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