Tariff barriers are restrictions on the external trade of a country, 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 as they increase the price of the good that is going to be sold or bought, depending on its characteristics and its volume of exchange.
In addition, it is a fiscal and budgetary control tool in addition to international regulation. It allows to know if a good or service is controlled and, therefore, to recognize if it is legal or not. While it is true, that in many countries tariff barriers are an obstacle to the entry of foreign direct investment and the arrival of capital into the country that make 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 interest to countries or economic zones from the side of import or export is for the following reasons:
- From an exportpoint of view, the country intends to generate income through tax collection, the more open and internationalized a country is, the more it exports and the more a State enters. It also allows correcting imbalances in prices for sale abroad and allows regulating its activity.
- From the point of view of importation, 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 since the Demand is not stable enough.
There are also non-tariff barriers to promote the protection of national industries. They try to put technical, legal obstacles, quotas or other measures that discourage importation.