Question

The main goal of trade barriers is to_____

a. to keep imports out to the benefit of domestic producers.
b. to keep imports high at the expense of exports.
c. to allow imports and keep domestic prices low.
d. to keep imports out at the expense of wars between countries.

Answer 1

Trade barriers are mainly designed to protect domestic industries by raising the cost and restricting the quantity of imported goods. Tariffs, import quotas, and nontariff barriers are among the tools used to practice protectionism, benefiting domestic producers but potentially leading to higher costs for consumers.

Step-by-step explanation:

The main goal of trade barriers is to protect domestic industries by raising the cost or limiting the volume of imported goods. This results in several outcomes, including the support for local businesses and the prevention of foreign products from overwhelming the market, which could negatively impact domestic producers.

Trade barriers come in different forms such as tariffs, import quotas, and non-tariff barriers. Tariffs are taxes placed on imported goods, which deliberately raises their price to make them less competitive against domestically produced goods. Import quotas restrict the quantity of goods that can be imported, and non-tariff barriers include regulations or standards that foreign companies must meet to sell their products domestically.

While protectionism may benefit domestic producers, it can lead to higher prices for consumers and a reduction in the variety of products available. It is also worth noting that organizations like the World Trade Organization (WTO) work to reduce trade barriers globally, promoting free trade and its associated economic benefits for all countries involved, especially smaller ones.