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trade barrier An artificial restraint on the free exchange of goods and services between nations. The most common types of trade barriers are tariffs, quotas, and exchange control. Such obstacles to trade are usually imposed by a country that wishes to protect domestic products in their home market against foreign competition, better its terms of trade, reduce domestic unemployment, or improve its balance-of-payments position. The raising of trade barriers by one country often provokes other nations position. Generally, the effect of a trade barrier is to reduce the volume of trade while increasing the domestic price of the protected good. Thus, it results in a relatively inefficient allocation of world resources and reduces the level of total world income and production | |
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