trade & trade barriers. how do tariffs, quotas, and embargos serve as barriers to trade?
TRANSCRIPT
Trade &
Trade Barriers
How do tariffs, quotas, and
embargos serve as barriers to
trade?
Tariffs • What are tariffs?
– Taxes on imports• What does it do?
– Raise the price of imported goods• Who does it benefit?
– Domestic suppliers …• increases demand from domestic suppliers AND • increases their prices!
• Who collects the money from tariffs?– Domestic government
Quotas • What are quotas?
– Puts a legal limit on the amount that can be imported!
• What does it do?– Creates shortages – which causes prices to increase
• Who does it benefit?– Domestic suppliers …
• increases demand from domestic suppliers AND • increases their prices!
• Is money collected from quotas?– No
Embargos • What are embargos?
– Prohibits trade with other nations
• What does it do?– Bar imports FROM a foreign nation OR– Bar exports TO other nations OR – Both!
• Who does it benefit?– NO ONE! – Normally embargos are imposed to hurt a nation’s
economy in a manner to force the nation to take a particular action
• Is money collected from embargos?– No!
Take 5 … • Interesting point … • The word “embargo” comes from a
derivative of “embargar” which means to hinder or embarrass
• Therefore … looking at the origins of this word, how do you think it relates to the meaning of the word?
Your chart should look like this … Trade barrier What is it? What does it
do?Who does it benefit?
Who collects the money?
Tariffs Tax on imports Raise the price of imported goods
Domestic suppliers•Increases their demand•Increases their prices
Domestic government
Quotas Limits the amount that can be imported
Creates shortages thus increases price
Domestic suppliers•Increases demand / prices
No money collected
Embargos Prohibits trade with other nations
Bars imports FROM other nations OR exports TO other nations
No one … usually meant to hurt nation’s economy to force them to take an action
No money collected
Your turn … • When would a nation
implement tariffs?• When would a nation
implement quotas?• When would a nation
implement embargos?
Free Trade Agreement
• What does free trade mean?• Who does the US have a free
trade agreement with?
The absence of trade barriers.
•Today, the United States has FTAs with 17 countries, such as Israel, Jordan, Canada, Oman, and
Singapore to name a few.•In 2006, six new FTAs were implemented: with Bahrain,
El Salvador, Guatemala, Honduras, Morocco, and Nicaragua.
What can we
determine about our
trading industry
based on this chart?
Balance in Trade • What do you think “balance in
trade” means?• Why do you think this is important
to a country?• What do you think would be the
disadvantages for countries who do not have a balance in trade?
Get your Quizdoms ready!!On your mark … get set …
GO!!!
What is a tax on imports called?
A)Embargos
B)Quotas
C)Tariffs
What is a limit on imports called?
A) Quotas
B) Tariffs
C) Embargos
What is it called when a country stops trading with another country in order to force a political change?
A) Tariffs
B) Quotas
C) Embargos
If a country’s government wanted to make some money on imports, which barrier would they implement?
A) Embargos
B) Tariffs
C) Quotas
In 1973, after the 2-day Yom Kippur War, Saudi Arabia used what trade barrier against the US in order to force the US to stop supporting Israel?
A) Embargo
B) Tarriff
C) Quota
On which country did the US impose an embargo in order to try to force the country to end apartheid?
A)Israel
B)Iran
C)Afghanistan
D)South Africa
Words to know … • Balance in trade• Tariffs• Embargos • Quotas • Free trade agreement
Trade BarriersTrade barrier What is it? What does it
do?Who does it benefit?
Who collects the money?
Tariffs ___on imports Raise the price of imported goods
____________suppliers•___________their demand•Increases their prices
____________government
Quotas _____the amount that can be imported
Creates shortages thus ____________price
Domestic suppliers•___________demand / prices
No money collected
Embargos Prohibits _______with other nations
Bars imports FROM other nations OR exports TO other nations
No one … usually meant to hurt nation’s economy to force them to take an action
No money collected
Trade BarriersTrade barrier What is it? What does it
do?Who does it benefit?
Who collects the money?
Tariffs
Quotas
Embargos