Trade Barriers MindMap Activity

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Barriers to International Trade

Currency Fluctuations

When the Canadian dollar is strong, it means that going south of the border is cheaper. Whether it’s a vacation in Hawaii or a shopping spree in New York City, a strong Canadian dollar can buy more in terms of U.S. dollars. Likewise, a weak Canadian dollar can buy fewer U.S. dollars – meaning that travel, shopping, and other expenses in U.S. dollars are more expensive.

A natural outcome of the floating exchange rate system that is the norm for most major economies.

Excise Taxes

Excise taxes are taxes paid when purchases are made on a specific good, such as gasoline.

A bottle of wine that normally costs $10 may have a specific excise tax of $2 imposed on it. As per the intent of the excise tax, the additional cost of the wine is passed onto the consumer, making the retail cost of the bottle $12.

Subsides

A sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive.

In March 2012, President Obama called for an end to the $4 bilion in oil industry subsidies. Some estimates indicated that the real level of oil industry subsidies is higher, between $10 and $40 billion. At the same time, oil company profits benefited when oil prices reached a record of $145 a barrel in 2008.

Landed Cost

A landed cost is the total price of a product once it has arrived at a buyer's door. The landed cost includes the original price of the product, all transportation fees, customs, duties, taxes, insurance, currency conversion, crating, handling and payment fees.

Standards

It is the local government service that works to protect consumers and support legitimate business.

Embargoes

An official ban on trade or other commercial activity with a particular country.

Tarrifs

A tax or duty to be paid on a particular class of imports or exports

A single paper clip manufactured and sold in the United States retails for less than a penny. Most paper clips sold in the U.S. are manufactured domestically and are priced favorably, due in large part to tariffs as high as 126.94% on Chinese-manufactured paper clips.