TYPES OF TRADE BARRIERS There are two types of trade barriers: – Tariff Barriers – Nontariff Barriers
Tariffs A tariff is simply a tax (duty) levied on a product when it crosses national boundaries. Types of Tariffs – Specific Tariff – Ad Valorem Tariff – Compound Tariff
When material inputs or intermediate products enter a country at a very low duty while the final imported commodity is protected by a high duty, the result tends to be a high protection rate for the domestic producers. The nominal tariff rate on finished goods thus understates the effective rate of protection.
But should a tariff be imposed on imported inputs that exceeds that on the finished good, the nominal tariff rate on the finished product would tend to overstate its protective effect.
– Tariff-Rate Quota: A Two-Tier Tariff a tariff-rate quota displays both tariff-like and quota-like characteristics. This device allows a specified number of goods to be imported at one tariff rate (the within-quota tariff rate), whereas any imports above this level face a higher tariff rate (the over-quota tariff rate). a tariff rate quota is a two-tier tariff.