Definition
Trade barriers are government measures that make it harder or more expensive to import goods and services. They include tariffs — taxes on imports — as well as quotas that cap quantities, subsidies that favor domestic producers, and regulatory hurdles such as licensing rules and standards.
Their stated purpose is usually to protect domestic industries, jobs, or strategic sectors from foreign competition. Economists group these policies under the heading of protectionism.
Why it matters
How it works
A tariff raises the domestic price of an imported good, shifting demand toward home producers and away from foreign ones. A quota does the same by limiting supply directly. Either way, domestic firms gain and consumers pay more, while the government may collect tariff revenue.
Standard analysis finds that the loss to consumers usually exceeds the combined gain to producers and the government — a deadweight loss. Barriers can also distort which countries produce what, pulling resources away from their most efficient use and weakening the overall productivity that open trade and specialization deliver.