What it is and reasons

-Approach used by governments to protect domestic producers

-Trade barriers are measures designed to restrict imports

Preventing Dumping

  • If a government feels overseas firms are dumping goods
  • Dumping is where an overseas firm sells large quantities of a product below cost in the domestic market
  • It's unfair competition for domestic users

Protecting Employment

  • If domestic industries need protection from overseas competitors to save jobs

Protecting infant industries

  • New industries yet to establish themselves to be protected from strong overseas rivals
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More Reasons

To Gain Tariff Revenue

  • Gov can raise revenue with tariffs on imports

Preventing the entry of harmful or unwanted goods

  • If a gov feels overseas producers are selling goods that are harmful or unwanted

Reduce Current Deficits

  • A gov may try to reduce imports and increase exports at the same time


  • A gov may feel obliged to retaliate by imposing heavy taxes on those goods when they come into the country. 
  • It May occur if a country imposes trade barriers on exporters.
  • Can result in a trade war
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Methods of protection

Tariffs: a tax on imports to make them more expensive

  • Will reduce demand for imports and increase demand for hoods produced at home
  • The advantage is they also raise gov revenue. 
  • But if set too high, imports will cease and consumers don't benefit

Quotas: the physical limit on the number of imports allowed into a country

  • They will raise prices because fewer of the cheaper imports are available
  • Helps protect employment because domestic producers have to meet the demand
  • The advantage is that foreign can't easily get round them by adjusting prices
  • Disadvantage is consumer choice is restricted

Subsidies: Money paid by a gov or organisation to make prices lower

  • Lower prices for consumer  because they reduce production costs and increase supply
  • May break terms of free trade agreements
  • More domestic firms are encouraged to enter the market. 
  • Costs the government money
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Impact of methods on markets

Tariffs and Qoutas

  • Tariff raises price and supply decrease (shift left)


  • Supply increase and price decreases
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