Items that Affect International Trade

International Trade

There are many things that affect international trade and costs of production of items. International sanctions, tariffs, quotas, and trade restrictions affect at least one party that is involved negatively, if not both parties. First let's define a couple terms. A tariff is "a tax on imports imposed by a government" (Sawyer & Sprinkle, 2006, p. 132). A quota on goods restricts importing of a good after a certain level (Sawyer & Sprinkle, 2006, p. 157). A quota will cause the importing of a country to be restricted to a certain number of units of the good per year. This means that the country who exports the item will have a reduced amount of demand and suffer due to a price decline.

International sanctions effect a country because they are basically being told "change your ways, or we are not trading with you" by another country. This creates hostility, but normally leads to the compliancy of the deficient country. One example of an international sanction is the United States embargo on trade with Cuba since the early 1960s. The international sanction was put into place by the United States to try to "persuade" the Castro regime to democratize, which has not worked (United States Chamber of Commerce, 2007). When international sanctions are put into place both of the countries suffer. The reason for the suffering is that neither of the countries is getting what they want, such as goods or labor. The country that is enforcing the sanction suffers because they cannot open up business in the other country. The deficient country suffers because they are not able to get the products, such as food, into their country that they need in order to survive.