Trade Barriers in IB
Tarrifs
DEFINITION: Tariffs are taxes or duties paid on certain types of imports.
EXAMPLE: President Donald Trump imposed a 25% tariff on steel and 10% tax on on aluminium. This tariff will raise the costs for the steel users such as automakers. This will then increase the price for consumers.
Subsidies
DEFINITION: subsidies is money loaned
from the government to certain industries
to help them with costs and as well to keep
prices for consumers lower.
EXAMPLE: The agricultural industry is helped
by the Canadian government or Canadian agricultural programs that specify in subsidies. This helps farmers with their business.
Embargoes
DEFINITION: A trading/commercial ban
with a certain country.
EXAMPLE: In 2017, Canada imposed a trading ban on Venezuela due to a human rights violation during a violent protest in Venezuela.
Currency fluctuations
DEFINITION: is a change in an exchange rate.
It is a natural outcome of the exchange rate
system.
EXAMPLE : For example, assume you are a U.S. exporter who sold a million widgets at $10 each to a buyer in Europe two years ago, when the exchange rate was €1=$1.25. The cost to your European buyer was therefore €8 per widget. Your buyer is now negotiating a better price for a large order, and because the dollar has declined to 1.35 per euro, you can afford to give the buyer a price break while still clearing at least $10 per widget.
Excise Taxes
EXAMPLE: Alcohol and cigarettes are known
to harm a persons health, so excise taxes
are put on these products to reduce the
consumption of these goods.
DEFINITION: tax paid on the manufacture,sale
or consumption of a particular product
within a country.
Landed cost
EXAMPLE: To get specialty paper from
New Zealand, it costs 20.00 per 5000
sheets. These sheets will be exported
to Wales and the importation tariff is 5%.
All of these costs will give them the the
landed cost.
DEFINITION: Is the official cost for an
imported product. This determines whether a
foreign purchase is a better deal than a domestic
purchase. It is the purchase price + all shipping costs.
Standards
DEFINITION: An agreement between businesses with a set of rules for in doing something such as making a product, supplying the materials, managing the process,etc.
EXAMPLE: In a restaurant
business, the owner gives
the staff a set of rules/standards
they must meet. This could boost
their business.