External Environments Replies
BeautifulFlower
PostDM.docxGovernment Restrictions on Trade
My chosen key term this week is Government Restrictions on Trade. I am very interested in the way that the US government imposes sanctions and restrictions on trade with other countries. I know that these restrictions are usually politically motivated and imposed on certain countries that do not comply with US laws and policies, especially countries that have sponsored or have been known to sponsor terrorism. I know that in the past the US has imposed sanctions on countries such as Iran, Cuba, China, Russia, and many other countries in Africa. Cuba has been the country with the longest running sanctions dating back to the 1960’s.
Explanation
Satterlee defines government restrictions on trade as “any attempt made to restrict trade with other countries especially in circumstances of large trade deficits or excessive currency outflows” (Satterlee, 2018, p.77). This could come in the form of tariffs, quotas, and embargoes. These types of restrictions are also called “sanctions,” it is another way for large governments to show their disapproval over how the country is comporting themselves. These sanctions can be detrimental to a country and can have long lasting effects. One reason for sanctions could be that a country is involved with or sponsors terrorism. Another reasons could be that a country is violating its citizens human rights.
Tariffs
Tariffs are taxes that are imposed on goods that are being imported by other countries. These tariffs usually bring higher prices and they lower sales. The country imposing the tariffs get a percentage of the taxes based on the value of the products. “Tariffs are similar to excise taxes (taxes on cigarettes and alcohol, for example) in design and economic impact” (Satterlee, 2018, p.77). Historically, tariffs were a way for countries to gain revenue as ships landed in different nations. Other than earning money for the government, tariffs also offer protection on goods. “Other tariffs exist as a form of protectionism, to make imported goods more expensive than they might otherwise be, in order to protect domestic industries” (McGuigan, 2022, para. 3).
Quotas
Governments can also utilize quotas as restrictions on trade. According to Satterlee, “also known as quantitative restrictions, to limit the quantity of imports allowed into a nation. Quotas typically raise the price of imports, reduce the volume of imports, and encourage demand for domestically made substitutes” (Satterlee, 2018, p.77). Quotas are similar to tariffs; however, quotas limit the amount of goods that come into a country. This can be good, as countries want to limit the amount of trade between them and other countries. The drawbacks are that they usually drive-up prices on goods and can increase smuggling activity. As with tariffs, quotas increase smuggling by the increase of prices, taxes, and volume.
Embargoes
Embargoes are also another form of trade restrictions. According to Satterlee, embargoes are economic and trade sanctions against targeted foreign countries, groups, organizations, and individuals (Satterlee, 2018, p. 78). These sanctions are usually due to political and economic reasons, and are used to try and influence a country to change their radical behavior. These sanctions can come in numerous forms, such as limiting or restricting imports and exports, restricting investing in the targeted country, and prohibiting private financial operations. Another reason for embargoes would be to protect national security and those industries that might be strategically important to supporting national security.
Summary
The article that I chose is “What are Trade Barriers?” this article discussed the different types of trade restrictions that can be imposed on countries. It also discusses how these restrictions or sanctions can have political and economic impacts on the countries when the United States imposes these sanctions. These sanctions are a way of punishing a country and trying to get them to change their radical behavior. They can come in the form of tariffs, quotas, and embargoes. These restrictions limit or exterminate all trade with countries that are not in compliance with US policies and laws. Most countries usually will adhere to the United States’ policies, however, there are countries that do not adhere and have sanctions put on their country until they do comply.
Discussion
The article that I chose explains all the different types of sanctions that can be imposed on a country and how it can affect the country if it decides to continue with their radical behavior. One of the US major threats is terrorism. The US will not tolerate any countries that sponsor or participates in terrorism or terroristic threats. These countries cannot trade, no imports or exports of their goods. It also talks about the World Trade Organization and how they help with World trade. The World Trade Organization replaced the General Agreement on Tariffs and Trade (GATT) which was created shortly after WWII.
The article that I chose is different from the other articles that I researched in that it explains and gives examples of the different kinds of sanctions that can be imposed on countries. It also explains that it not only imposes restrictions but also ensures that the goods that we receive from other countries meets industry standards. Not only does it speak about sanctions, but it also discusses the tariffs that can be imposed on certain goods. These tariffs are another form of taxes and a way to gain income for a country. Of course, certain tariffs usually raise the prices of the goods sold in that country.
References
ABC News. (2021) China urges US to lift trade restrictions, stop interference. ABC NEWS.
Barone, A. (2021) Quota. Investopedia. https://www.investopedia.com/terms/q/quota.asp
McGuigan, B. (2022) What are Trade Barriers? Smart Capital Mind. https://www.smartcapitalmind.com/what-are-trade-barriers.htm
Phiri, D. (2013) Why Nations impose trade restrictions. The Nation.
https://www.mwnation.com/why-nations-impose-trade-restrictions/
Radcliffe, B. (2021) The Basics of Tariffs and Trade Barriers. Investopedia. https://www.investopedia.com/articles/economics/08/tariff-trade-barrier-basics.asp
Satterlee, Brian. (2018) International Business with Biblical Worldview. McGraw Hill Publishing.
