Question

Why would countries be willing to place barriers on trade? Explain two factors that might encourage a country to place quotas and tariffs on imported goods.

Answer 1

1. To protect its local industries and jobs. Placing trade barriers restricts cheaper goods and service that may out-compete those of the local market if allowed to freely compete in the local market.
2. To protect its population when it feels that the foreign products or services do not meet its national standards and that the goods/services may be harmful for its local population as a measure of national security.
3. Trade barrier and tariffs are also used as a form of diplomacy. Trade barriers are imposed on good and services from a country that a nation considers hostile.

Answer 2

Answer: Responses will vary. A sample response follows: Countries might create quotas, tariffs, and other trade barriers to protect their own industries. A country may realize that an important industry is struggling because foreign competitors can produce goods more cheaply for import. These industries may lose employees or hurt the country’s economy. By restricting imports, a country would be encouraging its own industries to thrive while limiting the ability of foreign industries to grow in their place.

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