Trade Barriers Essay

Published: 2019-11-05 19:50:44
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Category: Economics

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The essence of trade barriers is to create various production costs and economic efficiencies through trade and market integrations. Generally, international trade is usually ratified and rationed by the use of various trade barriers such as trade sanctions, tariffs, quotas and restrictions. Such barriers affect the classical mobility of one country with the international trade relationships both in import and export structures.

Generally, any tariffs and sanctions on the import of auto engines is an important international economic control tool on the production level and costs of its local automobile industry. Through such barriers, the cost of importation of such products from the external market would be increased through the tariff levies to the importers by the government. Ideally therefore, importers will find it more expensive to import the same products as before.

Economically, high imports (cheap), increases the level of production costs on the local automobile industry in US. Higher imports will therefore educe the state of competitive advantage of the local auto industry. This implies that higher imports will increase the production costs of Acme. The product output of the company would therefore not be competitive in the local market since the consumers have a wider scope of auto choices to choose. Either, higher state of competition implies that Acme would provide more competitive products. (Prencipe, Davies, Hobaday, 2004)

However, the success of the trade barriers is in cases when there is a basic requirement of increasing the quality of output above maintaining high sovereignty of the consumers. Through higher trade inflows, the local manufacturers would be given the incentive to produce its products that adequately compete in the global market. The success of trade barriers occurs when their effects would result into international relations which lead to a favorable balance of trade. Generally, the impact of favorable balance of trade implies an economic situation with more exports than imports. The success of such trade barriers would be the economic implication where a favorable balance of trade is maintained. (James, 2003)










REFERENCE

James, C (2003) Classical Macroeconomics: Some Modern Variations and Distortions

London: Rout ledge.




Prencipe, A, Davies, A& Hoboday, M (2003) The Business of Systems Integration.




Oxford: Oxford University Press

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