Tariff barriers are taxes established by each country to restrict foreign trade. Normally, tariff barriers tax both exports and imports of goods or services carried out by a country. However, these types of rates are not limited only to countries, as there may also be tariff barriers by economic zones, such as those taxes on trade in the eurozone or the US dollar.
What are Tariff Barriers for?
When imposing a tariff, it increases the price of the goods or services, depending on the characteristics and volume of the transaction. This makes it possible to defend national products against foreign competition in the case of imports. In this way, national production is facilitated instead of acquiring these products outside the country.
But tariff barriers not only make products more expensive, they also help to control taxation and the legality of trade, since it allows governing bodies to have knowledge of the goods and exchanged services being audited and, therefore, determine if they are legal. As a result, the country that imposes the tariffs gets more revenue from tax collection while balancing prices to facilitate selling its products in foreign countries. This allows greater international visibility to exports making it easier to export, thereby increasing the revenue a country can generate. This also contributes to more stable prices of its products.
Another use that some countries often give to tariff barriers is as a protection measure against foreign capital investment. It usually occurs in countries that attract the entry of capital due to their favorable conditions for investment. Tariffs provide control for the governing bodies, hindering unwanted less favorable investors from entering the local markets.