How Tariff and Non-tariff barriers can affect your exports

Tariff and non-tariff barriers can affect your export business. In most countries, the governments impose these trade barriers and the general purpose behind them is to limit (or sometimes totally ban) the imports of some specific product. By imposing trade barriers, the governments are looking to achieve some or all of these economic targets.

• Encouraging domestic production


• Protecting local employees


• Increasing revenues


• Reducing consumption and reliance on exports

Whether they are able to achieve these targets or not, one thing is for sure, these trade barriers are going to hurt your business, if you are looking to export to that country. Read a little to get an idea of what tariff and non-tariff barriers are.

Tariff:

In simple words, this is the tax imposed on imported goods. In most cases the tax is collected at the moment some shipment arrives at ports. Governments normally force tariffs (or excise duty) to protect local industries and to raise their revenues, although many economists have debated against it. According to them these methods are faulty, because in the end it’s the consumer who suffers at the hand of high prices and inflation. As an exporter you’d be better off going for some country with minimum tariffs because you will loose the low cost advantage once you have to pay these taxes. Tariff allows local manufacturers to offer lower prices as compared to the imported items (still the customers are paying more than what they should be paying for this quality).

Non-Tariff Barriers:

All other restrictions on trade except tariffs are known as non-tariff barriers. These rules, regulations or policies are used for the same purposes (i.e. to restrict imports and protect local industries), however they cannot raise any revenue for the host country. Some of the common non-tariff barriers are quotas, quality standards, complex regulations, import license or import bans.

Both tariff and non-tariff barriers can ultimately hurt the national economy in the longer run, they provide shield to even those under performing industries and manufacturers who are not competitive at all, hence wasting the country resources and hurting consumers.  World Trade Organization has been established in order to lower trade barriers all over the world, and to improve transparency and non-discrimination in international trade. 153 members have joined till now, although no member country has shown total commitment in implementing rules and regulations that are decided at various conferences. Still as an international exporter you should try to target those foreign markets where imports are not discouraged in government policies.