Trading Barriers Are Not Good For International Business

Usually, free trade benefits to the consumers through increased choice and reduced prices. On the other hand, trade barriers likes duties, taxes, quotas can affect international trade by preventing the flow of goods from producers to consumers. It affects the productivity of the producers. Without net exports, a country cannot remain a consumer of other countries’ goods without incurring large debts through the imbalance of trade. It is economically beneficial to all parties
for maximizing the production of their industries, through open markets to a wide consumer base.
Trade barriers tend to be pro-producer and anti-consumer. The effect of trade barriers on businesses, consumers and the government shifts over time. In the short run, higher prices for goods may reduce consumption by individual consumers. During this period, businesses will profit and the government will sees an increase in revenue. But, in the long term, businesses may see a decline in efficiency due to a lack of competition. It may also see a reduction in profits due to the emergence of substitute to their products. The long-term effect of subsidies is an increase in the demand for public services, since increased prices.
Because of trade barriers overall national income reduced. Trade protection shifts income from consumers to producers. Therefore the consumers’ costs of trade protection exceed the loss to national income.
 

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