Tariff barriers are restrictions on a country's foreign trade, through taxes on the export and import of goods or services by a country or an economic zone. These taxes are known as tariffs.
Tariff barriers are a brake on many businesses since they make the price of the good to be sold or bought more expensive, depending on its characteristics and its volume of exchange.
In addition, it is a fiscal and budgetary control tool as well as international regulation. It allows to know if a good or service is controlled and, therefore, to recognize if it is legal or not. Although it is true that in many countries, tariff barriers are an obstacle to the entry of foreign direct investment and the arrival of capital to the country, making it a more attractive place for investment.
Advantages and disadvantages of tariff barriers
When we say that the tariff barriers of a good or service provide interests to countries or economic zones from the import or export side, it is for the following reasons:
- From the point of view of exports, the country intends to generate income through the collection of taxes, the more open and internationalized a country is, the more it exports and the more a State enters. It also allows you to correct imbalances in prices with a view to its sale abroad and allows you to regulate your activity.
- From the import point of view, the country intends to defend its national products against competition, considerably raising the prices of goods or services that come from abroad, favoring national production. This example can be found today in countries such as Ecuador or Venezuela where the consumption of foreign goods is considered luxury, there is even a shortage since national companies are not able to produce certain goods or services due to economic problems mainly given that the demand is not stable enough.
There are also non-tariff barriers to promote the protection of national industries. Attempts are made to put technical, legal, quotas or other measures that discourage imports.