Concept of Trade Barriers

300 words | 2 page(s)

The New York Times article (Landler, 2009), declares the rise in trade barriers as a function of protectionist government policy designed to reduce imports and to increase exports and internal consumption of domestic production. As the article claims the global economy is mired in its worst “economic downturn since World War II”, the Keynesian approach is to reduce excessive supply of goods in the general economy by supporting domestic consumption of domestic production.

Trade restrictions or trade barriers are supported using tariffs on goods that are imported from overseas. The trade barrier may not be on all imports just on the most competitive imports perhaps from the largest importer that export to the country in question. For example, Japan may decide to increase import tariffs on American automobiles to increase domestic demand for Japanese manufactured automobiles. The trade barrier as described by the article is seen as a government or policy solution to a growth and consumption problem.

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The global sentiment of protectionism is conveyed to have pervaded the decisions of world leaders as a means to avoid further economic slowdown. The G-20 which is inclusive of the 20 largest economies by Gross Domestic Product or GDP is at the forefront of enacting trade barriers to restrict competing imports from entering into the goods driven economy. The measure for trade restrictions used however, according to the NY Times article, is to “raise import duties or passed stimulus measures with trade-distorting subsidies.” (Landler, 2009) To illustrate an earlier point, “Russia has raised tariffs on used cars. China has tightened import standards on food, banning Irish pork, among other things. India has banned Chinese toys. Argentina has tightened licensing requirements on auto parts, textiles and leather goods. And a dozen countries, from the United States to Australia, are subsidizing embattled automakers or car dealers.” (Landler, 2009)

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