Question

Compare and contrast some different forms of non-tariff and non-quota trade barriers. Using a specific American industry, pick several of these trade barriers and explain the significance they would have on the ability of the firms within the industry to engage in foreign trade.

Answer 1

Compare and contrast some different forms of non-tariff and non-quota trade barriers. Using a specific American industry, pick several of these trade barriers and explain the significance they would have on the ability of the firms within the industry to engage in foreign trade.

Answer: Barriers on trade are put to protect domestic jobs and industries or it may also be put as retaliation to the other country's policy.

Embargoes, sanctions, and levies can be a few of the other types of barriers that countries can put.

Embargoes are complete ban on products from a certain country. These are extreme measures and are preferred during war like situations. Sanctions are less severe and prohibit trade in certain types of goods or transactions with particular individuals and entities. These are popular currently. Eg. US Putting sanctions on Iranian goods.

Levy is a kind of tax that can be put.It may also involve a fees for a certain activity.

As explained above US has put sanctions against goods and also on Iranian investments to and from USA.

There is complete ban on Iranian goods and US is also barring other countries from trade engagement with Iran. US is putting barriers on other countries.

Impact on USA: 1. Other countries and trade blocs are going away from Dollar as key currency. It may depreciate dollar and USA trade balance can worsen further.

2. Investments in USA will fall down as other countries may not get enough income due to these sanctions. Eg. From India.

Hence American banking and finance industry may not perform well. It is however true that USA has high credit rating and investment flow may not stop immediately but it will surely be affected negatively.